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Feature

Global investment turns to Turkey

June 2008 - With a booming economy, Turkey has been an attractive investment proposition for many foreign companies over the past 12 months, with foreign direct investment reaching $22bn in 2007.

Turkey remains appealing to the global advertising industry because there are relatively few brands, meaning there is plenty of room for international products.

Global players then are contributing to a growth in adspend – TV alone was up 17% between 2004 and 2007, while total adspend in 2007 was estimated to be €1.7bn. Tellingly, four of the top five spenders in the market are now multinationals, with Procter & Gamble leading the way.

One of the most controversial developments in media has been the long-awaited sale of ATV-Sabah group. Ciner Holding, the owner of Sabah, one of the most popular Turkish newspapers and the main challenger to Dogan’s Hürriyet, as well as Merkez Broadcasting Group, was seized by the government’s Savings Deposit Insurance Fund in April 2007 due to alleged irregularities.

After much speculation about potential bidders including Rupert Murdoch’s News Corp, CME, RTL Group, ProSiebenSat.1 and Greek commercial TV broadcaster Antena-TV, it was sold for $1.2bn to Çalik Group, owned by Ahmet Çalik, a close associate of Turkey’s prime minister Recep Tayyip Erdogan.

Erdogan had long complained that the secular media was out to get him, with the country’s largest media group, Dogan, exposing the government’s alleged attempts to undermine Ataturk’s much-guarded secular republic. The theory is that in an attempt to combat Dogan’s offensive, Erdogan has been encouraging his business friends to snap up rival titles. Erdogan’s 29-year-old son-in-law is also chief executive of Çalik’s holding company.

Erdogan had long complained that the secular media was out to get him, with the country’s largest media group, Dogan, exposing the government’s alleged attempts to undermine Ataturk’s much-guarded secular republic. The theory is that in an attempt to combat Dogan’s offensive, Erdogan has been encouraging his business friends to snap up rival titles. Erdogan’s 29-year-old son-in-law is also chief executive of Çalik’s holding company.

Elsewhere, leading Turkish online advertising agency Zapmedya was acquired by British advertising and marketing firm International Marketing and Sales Group in September 2007. Its first step was to establish an office in London and it is now looking at expanding into Moscow.

Established in 2000, Zap experienced rapid growth to become a Turkish market leader and, for the year ended 31 December 2006, had turnover of approximately $12m and profit before tax of about $2m

Bulent Boytorum, chairman of Zap, said: “This new alliance will not only strengthen our position in Turkey, but will also create very real and exciting opportunities for us in new markets in the years ahead.”

Internet usage increased in Turkey from six million users in 2002 to 26.5 million in 2006, with numbers expected to hit 29 million by 2010. Although the government has pledged to support the development of the IT sector, liberalisation has progressed slowly, with Turk Telekom still the dominant player. However, the government has picked out IT as a strategic sector for the economy and pledged to boost research and development.

Despite the global recession-mongering, there are a number of factors that should keep Turkey’s media a vibrant investment hothouse. Although GDP growth in 2008 is likely to weaken to around 4%, compared with an estimated 4.7% in 2007, it is forecast to accelerate to just over 5% in 2009.

Looking forward, in 2010, Istanbul is due to be the European Capital of Culture, which is likely to attract further foreign investment and boost adspend. Finally a planned change in the law allowing foreign investors to own 50% of Turkish companies, rather than the current 25%, is likely offer a boost to the country’s media industry.

Olivia Solon, London