Dogan Yayin Holding (DYH) met with Finance Ministry officials to look for a settlement regarding the tax fines which totals TRY 4.8bn. However the meeting ended without an agreement this morning and a disagreement protocol has been signed among parties.
DYH will continue with the legal process and will object to these tax fines. Also DYH's subsidiaries which have not taken any legal action against tax fines will also initiate legal action. This includes Hurriyet, which was fined TRY 35m in first half of 2009. Note that the legal action will be a long process and can take up to several years to be resolved. Therefore the uncertainty will continue for DYH and create a negative sentiment for the company. However we think that the news will have a negative impact for Hurriyet as the company is not a direct part of DYH's massive tax fine and also it set a side provision for its TRY 35m tax fine in its financial statements, which limits the negative impact on financials. We maintain our Buy recommendation for Hurriyet.