* Ad sales at media unit to help lift owner’s profitability
* Legal process in tax fine case to take up to two years
* May bid in government sales of power grids, plants
* Northern Iraq oilfield to start pumping in 2011
(Adds quotes, detail, background)
By Ayla Jean Yackley and Birsen Altayli
ISTANBUL, April 21 (Reuters) - An expected 20 percent rise in advertising sales will help Dogan Holding DOHOL.IS, which owns Turkey's biggest media group, post operating profit in 2010 after a loss last year, Chief Executive Nebil Ilseven said.
Dogan also expects the legal process in its appeal of record tax penalties to be completed in two years, Ilseven told Reuters in an interview late on Tuesday.
“We can say there will be less uncertainty in 2011, from the investor’s perspective,” Ilseven said.
Tax authorities last year fined Dogan Yayin DYHOL.IS, which controls about half of the Turkish media market, 5.7 billion lira ($3.8 billion) over alleged irregularities, raising concerns in the European Union about press freedom in Turkey.
Company finances were hit by the collateral required during the appeal of the fines.
Dogan, which also operates Turkey’s largest chain of petrol stations, had an operating loss of $30 million and an overall net loss of $210 million in 2009, according to its balance sheet, as ad sales plunged amid the global economic slowdown.
“The tax-case process is clearer now compared with last year, and at least the length of the regional court and appeals process is clear,” Ilseven said.
Dogan has said previously that it was singled out because of its critical coverage of Prime Minister Tayyip Erdogan’s government. Erdogan denies that charge, but has accused Dogan newspapers and channels of acting like an opposition party.
Ilseven said that up to 70 percent of Dogan's revenues last year came from its energy business, which is dominated by fuel retailer Petrol Ofisi PTOFS.IS.
“Energy will continue to be the locomotive again in 2010,” he said. “Profitability will reach a more positive level.”
Dogan and its partners may bid in a tender the government is holding in the coming months to sell four power grids. Dogan is also interested in the sale of state power producers, he said.
Dogan Holding shares rose 2.7 percent to 1.14 lira and Dogan Yayin climbed 2.08 percent to 1.47 lira at 0715 GMT, outperforming the benchmark index which fell 0.29 percent.
Efforts to sell one or more of its media assets, which the company previously said it would do as part of a wider company restructuring, have not yet yielded results, and Dogan is not currently in talks with any potential partners, Ilseven said.
Talks with Austria's OMV OMVV.VI, which already owns 34 percent of Petrol Ofisi, ended in November because the two sides could not agree on a valuation, he said.
Petrol Ofisi shares fell 4.5 percent to 6.35 lira.
“The process of a Petrol Ofisi stake sale to OMV is behind us. This issue is no longer on our agenda,” Ilseven said.
Last year, Dogan’s energy unit bought 50 percent of shares in two projects exploring in Kurdish-run northern Iraq.
A dispute between the central government in Baghdad and the Kurdistan Regional Government over whether the latter has the authority to issue licences on its own has blocked crude exports from the region and delayed Dogan’s production plans.
“This has affected our schedule ... We are definitely expecting commercial activity there in 2011,” Ilseven said.
Besides media and energy, Istanbul-based Dogan Holding also has interests in finance, industry, trade and tourism.
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