UPDATE 3-Turkey's Dogan denies newspapers' sale report

By Daren Butler ISTANBUL, Nov 10 (Reuters) - Turkey's biggest media group, Dogan Yayin, which is in dispute with the government over a crippling tax fine, denied a report that Germany's Axel Springer was buying five of its papers. Dogan said last month it was seeking new partners or the sale of stakes in subsidiaries in the face of a record 4.8 billion lira ($3.3 billion) tax fine, which exceeds the stock market value of its companies. Dogan, which controls half of Turkey's private media, has accused the Islamist-rooted government of persecution for its critical news coverage, which has included allegations of graft. The European Union, which Turkey wants to join, has also criticised the penalty over concerns about press freedom in Turkey. However, allegations that the fine is politically motivated have been rejected by the government of Prime Minister Tayyip Erdogan, which has accused mogul Aydin Dogan of using his media assets to further his business interests and campaign against Erdogan. The Aksam daily said on Tuesday that Dogan was selling the newspapers, but did not specify a source for the story. "There is no such transaction between Axel Springer and Dogan Yayin Holding regarding Dogan Gazetecilik assets," a source at Dogan Yayin told Reuters. The company later issued a formal statement denying the report. Axel Springer also rejected the media report. "We do not intend to buy the papers named in the Turkish press," a spokesman for the company told Reuters. Trading in shares in Dogan group companies were suspended temporarily after the newspaper report and were mixed when trading resumed during the morning session in Istanbul. Dogan Gazetecilik, the owner of the newspaper assets, rose as much as 10 percent and was up 4.7 percent at 3.6 lira at 1333 GMT. Dogan Holding fell 2.8 percent to 1.04 lira, and Hurriyet Gazetecilik was unchanged at 1.60 lira. TAX LEGAL PROCESS ONGOING Shares in Dogan Yayin, which brings together the group's media assets, were down 2.2 percent at 1.34 lira. Its shares had resumed trading later in the day after it said a court hearing into its tax fine had been adjourned. Dogan companies have opened a series of court cases to challenge the tax fine and the demands for collateral that accompanied them. Those cases are ongoing. Representatives of Dogan Yayin are due to meet Finance Ministry officials on Nov. 24 to discuss the fine. The fine has drawn parallels with Russia's treatment of oil giant Yukos, which was crippled by a huge tax bill that its owners said was politically motivated. Some observers say Turkey's tax code is ambiguous and open to interpretation and that the government wants to get rid of an uncomfortable critic before an election due in 2011. Any sale of the five papers -- Milliyet, Vatan, Posta, Radikal and Fanatik -- would leave the group with only the Hurriyet newspaper, alongside its television and other media interests. ($1=1.47 lira) (Writing by Daren Butler, additional reporting by Peter Maushagen in Frankfurt; Editing by Greg Mahlich and Will Waterman) Keywords: DOGANYAYIN/ ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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