ISTANBUL Shares in Turkey's top media group Dogan, locked in a long-running feud with the government, rebounded on Thursday after losing more than a third in value in the past two days due to a record $2.51 billion tax fine.
Critics of the government say Dogan Yayin is being unfairly punished because of its often harsh coverage of the government of Prime Minister Tayyip Erdogan, particularly over corruption allegations earlier this year. The government denies this.
The Finance Ministry fined Dogan Yayin 3.76 billion lira this week for unpaid taxes and penalties in what is the largest ever fine for a Turkish company.
Shares in Dogan Yayin, which owns top-selling newspaper Hurriyet (HURGZ.IS) and co-owns with Time Warner (TWX.N) broadcaster CNN Turk, rose 8.5 percent on Thursday after losses of 36 percent in the past two days.
Analysts said upbeat comments on Wednesday about the possibility of negotiating a settlement between the Finance Ministry and Dogan Yayin were encouraging investors.
It was the second major fine this year for Dogan Yayin, which controls more than half of the non-state media market and has been at odds in recent years with Erdogan over its coverage of the Islamist-rooted government.
Earlier this year Erdogan called on ruling AK Party members to boycott Dogan newspapers because of their coverage of the government.
International press groups have criticized the frequent statements by the prime minister against Dogan. The European Union, which Turkey hopes to join, has also raised concern.
Turkey's main opposition Republican People's Party on Wednesday accused the government of using the Finance Ministry's tax authority to punish a media group critical of the AK Party.
The government rejects the accusations, saying the Finance Ministry's tax authority is autonomous.
The fine roughly equals the $2.7 billion combined market value of the firm and its parent company, Dogan Holding (DOHOL.IS), raising concerns about the impact on the group's finances.
Senior government sources told Reuters on Wednesday that Dogan Yayin would need to raise collateral during the process.
"The stock was sold heavily yesterday. It opened with strong buying. It is very hard to reach a verdict. The collateral issue will be observed very closely, and the volatility in the stock may continue," said Tuncay Tursucu, head of research at Meksa Investment in Istanbul.
(Additional reporting by Birsen Altayli; Editing by Hans Peters)