UPDATE 1-Dogan-owned Hurriyet shares up 9 pct on sale rumours

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Fri Oct 2, 2009 7:59am EDT

* Dogan facing $3.2 bln fine from tax office

* Analysts question ability to pay

* Hurriyet a profitable Dogan unit

(Adds details, background, quote)

ISTANBUL, Oct 2 (Reuters) - Shares in Hurriyet Gazetecilik (HURGZ.IS), owned by Turkey's largest media company Dogan Yayin Holding (DYHOL.IS), rose around nine percent on Friday on talk its parent may sell the newspaper group to help fund a $3.2 billion tax bill.

By 1130 GMT the stock was the fourth most heavily traded on the Istanbul blue-chip index and was trading up 7.43 percent.

"There are so many local-based rumours tossed around, mainly these rumours refer to Dogan Group selling assets, but I believe Hurriyet is the last thing the Dogan Group would sell as it's one of the most valuable assets," said Kagan Cevik, managing director of equities at Standard Unlu.

Several Istanbul-based analysts, who declined to be named, also mentioned similar rumours.

Dogan Yayin declined to comment on Hurriyet's sharp share rise.

Dogan Yayin is currently facing a record fine of $3.2 billion from Turkey's tax authority, which has raised doubts over the ability of the holding to pay the fine without selling assets.

Dogan Yayin, which controls half of the Turkish media market, has accused the government of singling it out because of critical coverage of Prime Minister Tayyip Erdogan's Islamist-rooted AK Party. The government denies this.

The European Commission said last month the fine threatened press freedom in Turkey and could damage the country's bid to become a member of the EU.

(Reporting by Thomas Grove; editing by Simon Jessop)

((thomas.grove@reuters.com; Telephone: +90 212 350 7051; Reuters Messaging: thomas.grove.reuters.com@reuters.net)) Keywords: HURRIYET/DOGAN

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