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Creditors Reject The Better Offer, Insecurity Reigns

Investment strategies for media houses are as diverse as the sector. There is the endless search for new opportunities through new markets or new technologies. Simply moving cash is also a major consideration. Insecurity abounds within the media world making good investments very tricky.

deal in the balanceWhen owners of German newspaper Frankfurter Rundschau (FR) declared it insolvent last November the bankruptcy court opened bids to secure a new proprietor. Most media wags grumbled about the loss of jobs and, coming coincident with the closing of the Financial Times Deutschland, the tenuous state of German newspapers. Turkish publisher Estetik Yayincilik came forward with a bid as did big German publisher Frankfurter Allgemeine Zeitung (FAZ).

An end of February deadline for negotiations was set. The two main considerations would be price, obviously, and disposition of the 450 employees. FAZ offered to take only 28 employees and had no interest in the related printing plant. The Estetik Yayincilik bid secured jobs for 110 people, 30 at the printing plant. The financial consideration from either bid was not disclosed.

Estetik Yayincilik publishes Istanbul newspaper Sözcü, considered editorially nationalist, and is primarily owned by Burak Akbay. The daily is among the top five daily newspapers in Turkey by circulation. Several Turkish newspapers publish editions in Germany, where ethnic Turks make up the country’s largest minority group.

Creditors for the FR rejected the Estetik Yayincilik bid out of hand as “insufficient.” The price offered was “far too low” and financial guarantees “not sufficient,” said bankruptcy administrator Ingo Schorlemmer, quoted by agency dpa (February 25). “The creditors will not deal with a new offer.”

Big Turkish media houses have reached out to Germany before. Dogan Yayin Holding (DYH), Turkey’s biggest media house, failed in a 2006 bid for television broadcaster ProSiebenSat1.Media. Immediately after – coincidentally, say some – German publisher Axel Springer took a 25% stake in the Dogan TV division. DYH and Axel Springer moved forward on a bigger deal but it ran foul of Turkish media regulator RTUK, which opened an even bigger can of worms when tax authorities came after DYH and principal Aydin Dogan in 2009 for US$3.8 billion. Dogan called it blackmail. The settlement was far less.

ProSiebenSat.1 Group and Dogan Media formed a sales partnership for its online games division in November 2012. Last week DYH bought back Deutsche Bank’s 22% stake in publishing unit Dogan Gazetecilik. Time Warner, through Turner International, holds a 24.96% stake in CNN Turk, the remainder owned by DYH.

Last year Calik Group, the conglomerate owning Turkey’s second biggest media house, put television and newspaper assets up for sale. Major media houses – from Time Warner to News Corporation – lined up to bid and, one by one, dropped out because of the 25% foreign ownership cap. Eventually Qatari-based Lusail International Media took 25% of Calik-owned Turkuvaz Media.

With the Turkish economy expanding more rapidly than those in Western Europe the media business is good, or should be. Major media houses are wealthy though few are pure media companies; conglomerates are the biggest owners. Unsurprisingly, those owners have sought diversity, with foreign investments and through foreign investors.

Insecurity is also a factor. Successive Turkish governments have made, despite protestations to the contrary, little secret of pressure to keep the headlines and news programs sanitized. Self-censorship is a “common problem phenomenon,” said the European Commission’s 2012 progress report on Turkish EU accession.


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