* Time Warner, Texas Pacific Group among those interested
* Dogan Yayin fined 4 billion lira in taxes and fines in 2009
* Dogan Yayin has successfully appealed against much of fine
* Shares down 7.35 percent (Adds comment from sources, analysts, shares, background)
By Seda Sezer and Birsen Altayli
ISTANBUL, April 8 (Reuters) - Turkey's largest publisher Dogan Yayin said on Friday it would double its capital to 2 billion lira ($1.3 billion), raising the possibility it might abandon plans to sell its media assets.
The fact that the company has recently won a number of appeals against what would have been crippling tax fines also adds credence to the view that it no longer needed to sell, analysts said.
"A view is emerging in the market that the tax problems have been resolved. The possibility that the group may abandon the sale is being considered. This capital increase could be interpreted as indicating that it has abandoned the sale," said one analyst, who declined to be named.
Dogan Yayin announced to the Istanbul stock exchange on Friday it would use the funds raised by the capital increase to recapitalise its units. Its shares tumbled in response. By 1400 GMT they traded down 7.35 percent at 1.89 lira.
The publisher was not available for comment.
"If you are going to make a sale in the short term, it does not appear logical to go for a capital increase like this," said another analyst.
Dogan Yayin, which publishes Turkey's Hurriyet newspaper, has previously said it didn't want to exit the media sector entirely.
U.S. private equity fund KKR, Time Warner and private equity fund Texas Pacific Group are among shortlisted bidders for the assets.
KKR and Turkish foodmaker Yildiz Holding unit Gozde Finansal Hizmetler in February formed a consortium to bid.
A source close to the matter said the asset sale could also be postponed until after the June 12 election.
"I would actually be very surprised if this transaction is completed before the election. I do not expect such a sale."
Another source close to the matter said: "This capital increase decision seems to be a transaction contrary to the asset sale process."
Dogan Yayin said in February a court had overturned 679 million lira ($430 million) of tax penalties, the latest in a series of victories.
The latest rulings do not necessarily mean the end is near for a saga that began in late 2009 when Turkish tax authorities imposed 4 billion lira in back taxes and fines in a range of cases against Dogan Yayin. Both sides have a right to appeal.
The company has now won appeals against more than 90 percent of the fines, analysts said. The fate of the remainder is still to be decided by the court.
The magnitude of the fines prompted commentators to accuse authorities of using tax to punish Dogan Yayin for critical coverage of the government. The government has denied the fines were politically motivated. (Writing by Alexandra Hudson; Editing by Will Waterman) ($1=1.504 Turkish Lira)