Trump's Turkish Partner Rocked by Spat Over Secret Sourcing

(Bloomberg) -- Just days after President Donald Trump called out the media's use of anonymous sourcing, his Turkish partner has found itself in hot water in connection to the practice.

Shares in the company -- which owns Istanbul's Trump Towers in addition to several newspapers -- dropped on Monday, amid controversy over a report in its flagship paper that alleged tensions between Turkey's army and government.

Prosecutors opened an investigation into the story, the state-run Anadolu Agency reported, amid calls from pro-government journalists that the author be put on trial. The report carried the byline of Hande Firat, the TV anchor who shot to stardom when she broadcast President Recep Tayyip Erdogan's address to the nation live via FaceTime during last summer's failed coup attempt.

The company, Dogan Holding, which also has interests in real estate, construction and energy, closed 4.9 percent lower in Istanbul -- the biggest decline since police detained one of its senior executives on Dec. 1. Shares in Dogan's main newspaper, Hurriyet Gazetecilik, lost as much as 8.5 percent before closing 6.1 percent lower.

Army Disquiet

Firat's story in Hurriyet cited alleged military gripes over seven issues, including not being consulted over a recent move to allow women in service to wear the Islamic headscarf. With the country still in a state of emergency after rogue elements of the army attempted to overthrow the government in July, her report has played into latent tensions and reignited a long-standing quarrel between Turkey's leaders and Dogan Holding.

Pro-government columnists called for legal action against Firat and the newspaper's proprietor, the 80-year-old billionaire Aydin Dogan. The story's title, “Discomfort Within Army Headquarters” was changed on Hurriyet's website, although it still earned mention from the country's Prime Minister Binali Yildirim, who said the group was trying to “give the government directions,” according to newspaper Yeni Safak.

The sources for the story might be a “junta structure” antagonistic to the government, the prosecutor said in Monday's filing, echoing the language of July's thwarted putsch.

“The relationship and the dialog between Dogan Group and the government has again become one of the main catalysts in the stock performance,” said Figen Ozavci, deputy chief executive officer at brokerage Meksa Yatirim Menkul Degerler in Istanbul. “The stock is highly sensitive to rumors and news which hint at some direction in that relationship.”

Dogan Holding used to dominate Turkey's media landscape until the threat of a multi-billion dollar tax fine forced it to sell assets and adjust coverage. Erdogan has said the group represents the “Old Turkey” mentality he's trying to do away with in April's referendum, in which citizens will vote on a constitutional change to increase his powers.

As of 2016, Turkey ranked 151st of 180 countries in the most recent Reporters Without Borders Press Freedom Index. Developments in the media landscape there are “very alarming,” Axel Springer CEO Mathias Doepfner said in November that his company will gradually sell its remaining stake in Dogan TV by 2022. Dogan Holding owns 93.2 percent of Dogan TV, according to Borsa Istanbul data.

To contact the reporter on this story: Tugce Ozsoy in Istanbul at tozsoy1@bloomberg.net.

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Isobel Finkel, John Viljoen