ECONOMY

Turkish media sector set for a shake-up

ISTANBUL – Turkey’s media sector is set for a shake-up as shares in two of the top three companies come up for sale just as hopes are growing for the newly elected government to relax ownership rules on the politically sensitive industry. The sector is currently dominated by family-run Dogan Yayin, which controls more than 40 percent of the advertising market and has already started making partnerships with foreign investors. But new players will try to undermine its lead. «Dogan Yayin is the indisputable leader… If foreigners are going to pay a premium to buy the assets they will want to increase their market share,» said one sector analyst. Expected to come up for sale this year, according to sources familiar with the deal, is 50 percent of the media business of indebted conglomerate Cukurova – the third-biggest media firm – and the assets of No 2 media business Merkez. Foreign investment participation in these sales could also pick up if a law restricting foreign ownership of broadcasters to 25 percent is lifted by the re-elected Justice and Development Party (AKP) government, which has a track record of pro-business measures and attracting foreign investment. Many in the sector expect it to raise or ditch the limit, which it tried to do in 2005 but was blocked by President Ahmet Necdet Sezer, who is due to leave office soon. «When Sezer goes, that (foreign ownership limit) probably will be changed. The AKP wants to be open-market and liberal in everything so it’s unlikely they will stick with that limitation. At least they will increase it,» another industry analyst said. Some analysts expect the government would welcome a more diverse media, especially a foreign publisher with a less political agenda than local groups. One key obstacle though would be nationalist uproar – the opposition has already campaigned against banks being sold off – and the government will have to weigh this against the positive impact a change in the ownership rules would have on much needed foreign inflows. Media is one of the fastest-growing sectors in European Union candidate Turkey. Dogan expects ad revenue to grow some 30 percent this year and figures like that have lured financial investors into the sector, most recently Deutsche Bank, which bought 22 percent of Dogan’s newspaper arm. Canada’s CanWest, Rupert Murdoch’s News Corp and Axel Springer have also recently come in with Turkish partners. A large, mainly young population with growing wealth makes Turkey more attractive than many emerging market rivals. «It’s all about how many people you can reach. For international advertisers, if you can say you’ve got 70 million people, forget about the language, that’s a very good competitive advantage,» said Orhan Cem, partner for corporate finance at Price Waterhouse Coopers in Istanbul. Seized assets Merkez assets, which include popular newspaper Sabah and high-rated ATV, will be auctioned by a government body which seized them, alleging irregularities, from conglomerate Ciner. The TMSF fund which seized the assets has said it expects to raise $1.5-2 billion from a sale this year. But financial sources say legal issues still have to be sorted out so that the buyer does not end up shouldering the legal risks. When the TMSF seized mobile firm Telsim from the indebted and high-profile Uzan family, it packaged the sale so that the buyer, Vodafone, did not inherit the liabilities. «Most probably it will be an asset sale where the assets of the company are wrapped and sold whereas… the liabilities are kept with the TMSF,» a financial industry source said. The TMSF had not said how the sale will be carried out. A source familiar with the situation said Mediaset, Prosiebensat 1 Media AG and News Corp were looking at the assets. Prosiebensat was not available to comment, News Corp declined to comment and Mediaset denied it was looking.