Weather Forecast for Istanbul : 21C and Clear Skies. Ad Forecast : 22% Growth

Michael Hedges April 18, 2006

CanWest completed its deal to buy four radio stations in Turkey, paying €49.9 million for minority stakes with options for more and certain “operating” agreements. To put this into perspective, GCap Media – the UK’s biggest radio company – let bids on nine of its smaller – but profitable – UK stations but withdrew them from bidding in March because the best offer was about €40 million, considerably less than the €70 million expected.
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This new announcement expands CanWest’s investment in Turkish radio broadcasting. CGS Televizyon Ve Radyo Yayinciligi Ticaret Anonim Sirketi (CGS) won the bidding in September for Super FM and Metro FM held by the Turkish Savings and Deposit Insurance Fund (TMSF) which earlier had foreclosed on holdings of the Uzam family. Other bidders were not named. CanWest’s equity – held by Netherlands affiliate CGS NZ TV Shareholdings - is limited to 20% with the remainder held by Turkcom, a Turkish investment group. Turkcom, separately, successfully bid on Joy FM and Joy FM Turk, paying €4 million, now spinning them into the CanWest deal. When the deal for Super FM and Metro FM was first announced last year, Reuters reported the price of Super FM – the biggest of the four -  at €27 million and Metro FM at €19 million.

Both Super FM and Metro FM are national radio channels. Joy FM and Joy FM Turk are local Istanbul stations. All are music stations, all the better to escape the ire of nervous regulators under pressure to lift ownership and content rules.

“Turkey continues to be one of the fastest growing economies in the world with a rapidly expanding advertising market,” said CanWest MediaWorks International president Tom Strike in a press statement. So, do we appreciate Canadian restraint?

HSBC Global Research forecast ad spending in Turkey to reach €2.5 billion by 2008, double the 2005 figure.

With ad growth rates in Turkey behind only Russia and India as the world’s leaders and the government set to liberalize media rules to comply with the bid for EU membership, the real question is why other big international media companies haven’t yet taken the plunge.

TV in Turkey, like Russian TV, is known for high ad rates and excruciating ad clutter, always adding value to radio advertising.

The Turkish media landscape is dense. There are dozens of TV channels, hundreds of radio stations. It is also very concentrated. Eight companies control the major print and electronic media and several are also in the banking business, which is ultimately how CanWest made the deal.

The media sector is important to EU membership but banking is extremely important.  The EU has very unforgiving rules on capital adequacy. Turkish officials have moved quickly in recent years to weed out, shall we say, dicey banks and bankers.

In February 2004, TMSF seized the assets of the Uzam family’s 200 businesses. There seemed to be a problem in the repayment of €4.7 billion in loans owed the family owned bank. Those assets included Star TV, the Star newspaper, the GSM operator Telsim and several radio stations, including the four now owned by CanWest and Turkcom.  The Star newspaper and its printing plants were sold in January for $5.15 million, far below the expected price at about four times revenue. Dogan Media Group picked up Star TV last year for a cool €250 million.

Those looking for great deals on media properties just might want to visit the TMSF. They have several available. Call now before they go to eBay.

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Turkish Media Company Sold to News Corporation/Ahmet Ertegun Partnership – July 27, 2006

National media laws being what they are – often restricting foreign ownership – local partners become essential. Big media companies – being what they are – avoid holding minority positions. Acquiring Turkish TV network TGRT, News Corporation found a solution to both problems by teaming up with Turkish national and Atlantic Records Chairman Ahmet Ertegun.

Turkish law restricts foreign media ownership to 25 percent. Relaxing those restrictions failed last year with Turkish Prime Minister Recep Tayib Erdogan proposing new rules and President Ahmet Necdet Sezer opposing…and vetoing.

News Corporation, through subsiderary News Netherlands BV, is buying all the shares of TGRT’s parent company – Huzur Radyo TV - for YTL 151 million ($98 million). The partnership with Ahmet Ertegun bought 56.5% of TGRT for YTL 127.6 million ($82 million). Huzur Radyo TV also owns several television channels in turkey, TGRT being the most well-known. TGRT launched in 1993 as one of the first national television channels in Turkey.

The deal did not include radio network TGRT FM or TGRT News network, which remain with Ihlas Group.

The Turkish advertising market grew more than 30% over last year to about $1.7 billion. Last year News Corporation purchased a majority interest in outdoor ad company Kamera Reklam.

Ertegun immigrated from Turkey to the United States where his father was Turkish Ambassador to the US. Ertegun, with brother Nesuhi, founded Atlantic Records launching music careers of Ray Charles, Led Zeppelin and Aretha Franklin.