Domestic and Foreign Investors and Entrepreneurs Along With Governmental Support and Incentives in the Media Sector in Türki̇ye

I. Introduction

In Türkiye, the media sector has become a diverse and dynamic field for both domestic and foreign investors and entrepreneurs in an age where information and communication are rapidly evolving. Various governmental support and incentives are provided to encourage domestic and foreign investors in the media sector and to provide a competitive advantage.

In the sector where the demand for creative ideas and innovative content is increasing, entrepreneurs entering the media field must first comply with fundamental regulations such as Law No. 6112 on the Establishment and Broadcasting Services of Radio and Television Enterprises (the "Law No. 6112") and Press Law No. 5187 (the "Press Law"). Within the framework of these regulations, legal and financial government incentives are provided to increase the potential of domestic and foreign entrepreneurs operating in this field, especially focusing on support for content creation. These supports contribute to the development and growth of the sector by encouraging content production, increasing employment, and strengthening competition in the sector.

 
II. Media Sector in Türkiye

The media sector in Türkiye is primarily shaped around journalism and television broadcasting within the framework of the Press Law, the Law No. 6112 and the relevant regulations.  

Pursuant to the Press Law, both individuals and legal entities may own printed works such as newspapers and magazines published periodically in Türkiye, as well as periodicals such as news agency publications and news websites. Accordingly, periodical activities are open to domestic and foreign investors as stipulated by the legislation. Thus, each periodical publication must have a responsible manager. Responsible managers must be over eighteen years old, have a domicile and permanent residence in Türkiye, be a Turkish citizen or have reciprocity requirements for non-citizens, and meet other conditions required by the legislation. In case the owner of a periodical publication is a legal entity, the representative of the legal entity, as a real person determined by the authorized body of the legal entity among the managers, must also meet these conditions. With compliance with these requirements, periodical publication activities to be established as a legal entity or conducted as an individual are open to domestic and direct foreign investors.

Under the Law No. 6112, private media service provider organizations are entitled to start broadcasting activities by applying for a broadcasting license to provide radio, television, and on-demand broadcasting services. However, there are certain criteria regarding their company structures and shareholding rates that private media service providers intending to obtain a broadcasting license must comply with. Accordingly, broadcasting licenses are granted exclusively to joint stock companies established in accordance with the provisions of Turkish Commercial Code No. 6102, solely to provide radio, television, and on-demand broadcasting services, with the exception of being publicly traded, and their shares must be registered. The same entity may only provide one radio, one television and one on-demand broadcasting service. Moreover, an individual or legal entity can directly or indirectly be a shareholder in up to four (4) terrestrial radio and/or television broadcasting service provider organizations. Nevertheless, in the event that the total annual commercial communication revenue of the media service provider organizations in which an individual or legal entity directly or indirectly owns shares exceeds thirty percent (30%) of the total commercial communication revenue in this sector, they must transfer their shares in order to reduce this ratio below the specified limit within the ninety-day period given by Radio and Television Supreme Council (the "RTUK").

On the other hand, there are certain requirements to be met especially for foreign investors. Accordingly, if there is a direct total foreign capital share in a media service provider organization, this capital should not exceed fifty percent (50%) of the paid-in capital. A foreign individual or legal entity may be a direct shareholder in up to two (2) media service provider organizations. In addition, foreign individuals or legal entities can indirectly participate in broadcasting organizations by participating in companies that are shareholders of media service provider organizations. In this case, the chairperson and deputy chairperson of the board of directors, the majority of the board of directors and the general manager of the broadcasting organizations must be Turkish citizens and the majority of votes in the general assembly of these broadcasting organizations must be held by real or legal persons of Turkish nationality.

Subject to complying with these limitations stipulated in the relevant laws, both domestic and foreign investments can be made directly in the media sector in Türkiye. Considering that the media sector is an important tool for the expression of various views, public opinion formation and social diversity in a democratic society, governmental support and incentives provided to local and foreign investors play an important role in the development of this sector.

III. Governmental Support and Incentives in the Media Sector in Türkiye

The media sector not only provides employment to many individuals and contributes economically but also strengthens communication infrastructure and freedom of expression, it facilitates access to information, raises societal awareness, preserves, and supports cultural diversity, plays a key role in the dissemination of entertainment and art, enables the sharing of Türkiye’s touristic and cultural riches with the world through promotional films, and contributes to Türkiye’s technological advancement with the development of digital media. When all these factors combine, the media sector plays a significant role in Türkiye's social, cultural, economic, and political dynamics. Supporting investments and initiatives in this area contributes to economic growth and can increase employment in the sector, while also promoting diversity and strengthening freedom of expression within the media sector. Entrepreneurship and competition in the media sector help a country to be more effectively represented on the global stage. Governmental support is crucial in enhancing the competitive edge of domestic entrepreneurs operating in this field. Support provided to foreign investors, enhances the potential to reach a broader global audience, thereby stimulating innovation and competition in the sector. In this context, governmental incentives and support offered to local and foreign investors are important for the development of the sector and the country.

1. Support Offered to Domestic Investors and Entrepreneurs

In Türkiye, the media plays an important role such as preserving and disseminating cultural heritage and supporting local languages and cultures. The support provided by the government to the media sector not only encourages content production to preserve cultural richness but also aims to facilitate domestic content creation, raises awareness in the international sector, and contributes to the economy and employment.

i. The Investment Incentive Program, implemented by the General Directorate of Incentive Implementation and Foreign Investment, aims to encourage the participation of domestic and foreign capital in the market by providing financial support.

For investors and entrepreneurs interested in investing within the framework of the regulations governing the media sector, government support is initially provided under the Investment Incentive Program to establish new businesses, expand existing ones, or promote activities in the sector. Within the scope of this program, investment incentive support is provided to individuals and capital companies, subject to fulfilling the conditions required by each application.

Particularly, investments exceeding minimum fixed investment amounts and capacities are supported within the scope of General Incentive Practices without any regional distinction, providing incentives such as value-added and customs tax exemptions, tax deductions, employer’s share of insurance premium support, interest or profit share support, and investment site allocation are available to investors who receive investment incentive certificates (https://www.sanayi.gov.tr/destek-ve-tesvikler/yatirim-tesvik-sistemleri).

ii. Various supports are offered with the KOSGEB Entrepreneurship Support, aiming to promote, disseminate and successfully establish new businesses that will enter the sector.

With KOSGEB Entrepreneurship Training and Support, it is aimed to support new entrepreneurs who are capable of exporting and enabling Türkiye to compete in global markets. In this respect, government supports are provided within the framework of KOSGEB Advanced Entrepreneurship Training and Support including establishment support, performance support, machinery, equipment and software support in case of realization of post-production activities such as visual effects, animation, subtitling, titling, graphics, etc. in motion picture, video and television programs. Therefore, the aim is to increase the number of enterprises in the media sector that have high employment potential, can create brand value, are innovative and have a technological infrastructure.

iii. Budget support is provided for the production and development of content in the film sector through Law No. 5224 on the Evaluation, Classification and Support of Cinema Films.

Support to the media sector is also provided on an artwork/content basis due to its focus on the production of works and/or content. For example, Law No. 5224 on the Evaluation, Classification and Support of Cinema Pictures (the "Law No. 5224") aims to develop and strengthen the cinema sector in areas such as education, investment, enterprise, production, distribution and exhibition, as well as the evaluation and classification of cinema films, and support domestic and foreign investments and enterprises in this field. Under the Law No. 5224, government support is provided for project development, first feature-length fiction film production, feature-length feature film production, co-production, documentary film production, post-production, distribution and promotion, provided that it does not exceed 50% of the total budget specified in the application, and the entire total budget specified in the application can be supported for animation film production, short film production, script and dialogue writing and local film screening support types. In addition, under Law No. 5746 on Supporting Research and Development and Design Activities, production and post-production activities of cinema, TV series and television programs are considered design activities and are supported. The incentives provided for design activities carried out within the scope of the legislation are design discounts, income tax withholding incentives, stamp duty and customs tax exemption and Social Security Institution employer premium support.

2. Support Offered to Foreign Investors and Entrepreneurs

The principles regarding the encouragement of direct foreign investments in Türkiye, protection of the rights of foreign investors, adherence to international standards in investment and investor definitions, transformation of the permission and approval system into an information system for the realization of direct foreign investments and increasing direct foreign investments through identified policies have been regulated by Law No. 4875 on Foreign Direct Investments (the "Law No. 4875"). Only treatments applicable to direct foreign investments are regulated within the scope of Law No. 4875, aiming particularly at encouraging foreign investments, ensuring the protection of the rights of foreign investors and their equal treatment, and implementing the principle of investment freedom.

i. Foreign real and legal person investors are provided with the opportunity to establish all types of companies specified in the Turkish Commercial Code, under the scope of the Law No. 4875

The Law No. 4875 also removed many legal obstacles for foreign investors, shifted from a permit-approval system to an informational system, provided guarantees against expropriation and nationalization, and allowed the transfer of capital, profits and other revenues. There are no restrictions for foreign real and legal persons regarding the type of company they may establish, and foreigners are allowed to establish all types of companies under Turkish Commercial Code No. 6102. Therefore, within the scope of the Law No. 4875, foreign investors are equally granted the right to establish any type of company that Turkish citizens can establish. In this regard, the process of establishing a company for foreign investors wishing to operate in the media sector has been facilitated by the Law No. 4875 within the legislative framework, emerging as a legal incentive.

ii. Within the scope of the Law No. 5224, "Foreign Movie Production Support" has been added to the support types in order to reimburse foreign film productions up to thirty percent (30%) of the amount they invest in Türkiye.

Within the scope of the Law No. 5224, "Foreign Film Production Support" was included in the support types in order to reimburse foreign movie productions up to thirty percent (30%) of the amount they invested in our country. Applications for Foreign Film Production Support are made by domestic co-producing or service-providing domestic production companies. The domestic co-producer or service-providing domestic producer must have produced or co-produced or provided production services for at least two feature-length feature films or at least one season-long TV series that have been screened in one of the cinemas, cable, satellite, terrestrial and internet media within the last five years. In order for the support application to be evaluated, it is mandatory to obtain the minimum score from the qualification test, which includes cultural content, the contribution of the country's citizens to the production processes, goods and services used in the country. The minimum score is at least fifty (50) out of hundred (100). If all relevant conditions are met, the amount of support to be provided cannot exceed thirty percent (30%) of the amount spent in the country and accepted by the Ministry. If the amount incurred in the country exceeds the estimated expenditure amount notified to the Ministry of Culture and Tourism in the application file, the support amount is calculated based on the estimated expenditure amount notified to the Ministry of Culture and Tourism. The minimum amounts to be spent in Türkiye by type are as follows:

In case the film is a co-production, the expenditures made in Türkiye will be calculated according to the shareholding ratio of the foreign producers, and the supported production must be shown abroad for commercial purposes in at least one of the commercial cinema, cable, satellite, terrestrial and internet media.

The support is provided in a single payment after the submission of the invoice and certified public accountant's report up to the amount of the support received and the fulfillment of other obligations specified in the contract, and those who benefit from this type of support will not be able to benefit from co-production support for the same project (https://sinema.ktb.gov.tr/TR-249001/yabanci-film-yapim-destegi.html).

On the other hand, in accordance with the principle of equal treatment, domestic and foreign investors wishing to invest in Türkiye can benefit from the same governmental incentives, unless otherwise stated. In this respect, it can be said that foreigners who want to step into the media sector have the same government support as domestic investors and entrepreneurs. However, due to the increasing costs of film production in recent years, production companies have started to investigate film production opportunities in foreign countries and to seek countries that provide incentives to reduce production costs. In this respect, although there are some governmental incentives for the sector, there is insufficient economic incentive mechanism for both domestic and foreign filmmakers in Türkiye, especially for the production of content, which greatly reduces the competitiveness.

IV. Conclusion

In conclusion, the media sector is undergoing a dynamic evolution both locally and globally, presenting unique opportunities for entrepreneurs.  To encourage domestic and foreign entrepreneurs to capitalize on the potential in this field, governmental support in Türkiye focuses not only on fostering economic growth but also on strengthening cultural diversity and freedom of expression. Support such as investment incentives, tax benefits and training programs assist, entrepreneurs in the media sector to achieve sustainable growth and development. However, it is crucial to pay attention to the specific needs of the media sector to effectively utilize these supports, particularly by increasing governmental incentives offered to foreign investors.

In addition to the financial incentives offered, the ability of foreign producers to operate in Türkiye depends on criteria such as the management of preparation and production processes in the sector, economic and flexible labor force, technical infrastructure, shooting permits for the cinema sector and bureaucratic procedures. Therefore, expanding the scope of support provided to domestic and foreign investments and improving the processes will increase the contribution to the sector. In addition, considering that Turkish TV series and movies have achieved great success in exports, in order to make this success sustainable, it is necessary to increase and diversify the support provided to the sector through meetings with sector representatives, to ensure the production of Türkiye-specific stories centered on creative and original content, and to contribute to taking place in the market with high-level productions. In this process, strengthening the education system on a sectoral basis in order to create a qualified workforce, and providing special support and incentives to projects that achieve international success and contribute to the promotion of the country will be an important incentive factor.