Commenced yesterday afternoon at 2 p.m., the talks lasted for some 16 hours. Doğan Yayın attended the meeting with a committee led by Mehmet Ali Yalçındağ, Chief Executive Officer of Doğan Yayın and executive of Doğan Holding. Revenues Administration (GİB) Head Mehmet Kilci presided over the meeting, which was also attended by Doğan Holding Deputy Chairwoman İmre Barmanbek.
Doğan Yayın was slapped with a TL 693 million tax fine by tax authorities in February over the sale of a minority stake in subsidiary Doğan TV Holding to German publishing giant Axel Springer, which owns the renowned Bild and Welt dailies. After failing to provide proper collateral in the given time frame, tax authorities froze Doğan's bank accounts in March in a legal wrangle over the tax dispute. After four months, some of the assets were released, while Doğan TV Holding shares held by the tax office under a precautionary attachment rose to 53.9 percent. The company faced worse in September, when tax inspectors fined firms controlled by Doğan TL 3.76 billion, twice the level of tax arrears, which officials assessed at TL 1.88 billion after examining accounts for 2005, 2006 and 2007. The amount rose to TL 4.8 billion including interest.
The tax office requested that Doğan Holding units Doğan TV Holding, D Yapım Reklamcılık, Doğan Produksiyon and Alp Görsel Communications put up a guarantee equal to the total fine of TL 4.8 billion. Doğan reacted by launching a court challenge to the guarantee requirement. In mid-October, Doğan Yayın said it had provided collateral in the form of shares in Doğan units and 44 properties to the tax office to cover the fine. The tax office then imposed a preliminary injunction on the sale of shares in three of Doğan’s units, and one day after this, Doğan Yayın said the tax office had rejected the guarantees. On Oct. 30, Doğan said the company had received an invitation from the Finance Ministry to hold talks on settling the tax fines. On Nov. 4, Doğan Yayın said its units Doğan TV Holding, Doğan Prodüksiyon, Alp Görsel İletişim and D Yapım Reklamcılık would have talks with the Finance Ministry on Nov. 24 to discuss a possible settlement. Doğan Yayın also said that if there was no agreement, the court process for the stay of execution would continue from where it was.
The tax fine, which is larger than the combined market value of Doğan Yayın and the firm’s parent company, Doğan Holding, threatens the survival of the Doğan media group.
Meanwhile, Doğan Yayın reported a TL 147.14 million consolidated net loss for the first nine months of the year, a figure 242 percent higher than that posted for the first three quarters of 2008.
Moreover, the Capital Markets Board (SPK), Turkey’s exchanges watchdog, announced in September that it will file an official complaint against Doğan and three other executives for deliberately causing financial losses to Doğan Holding. The SPK accused several Doğan Holding executives, including Doğan himself, of the same charge last year as well.
‘Doğan Yayın’s innocence will be shown’
On the other hand, Doğan Yayın CFO Soner Gedik asserted on Nov. 12 in an interview with CNBC-e that his company has been treated unjustly. Doğan Yayın’s participation in tax settlement talks did not prevent the company from appealing to the tax court, he recalled, continuing by saying that they expect the tax settlement talks to reveal the company’s innocence and that they hope for an apology.
The company also announced yesterday that the agreed sale of a 29 percent stake of Doğan Yayın to Axel Springer, which was announced last week, will take place providing the tax proceedings and the regulatory proceedings from the Radio and Television Supreme Council (RTÜK) Law are resolved successfully. Doğan Yayın had been accused of violating the law in its sale of ownership shares to Axel Springer in 2006. RTÜK announced last month that it has given Doğan Yayın Holding three months to comply with a law limiting foreign ownership of a private radio or TV station.
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