Telegraph takeover: UK planning new laws to prevent foreign states owning assets
The UK government plans to introduce legislation that would prevent foreign governments owning UK newspapers and magazines in a move that could scupper the planned £600m sale of the Telegraph to a UAE-backed consortium.
RedBird IMI – a partnership between IMI, a fund backed by the UAE’s vice-president, Sheikh Mansour bin Zayed Al Nahyan, and the US investment firm RedBird Capital Partners – is seeking to acquire one of the UK’s most influential newspaper groups.
However, the planned takeover has been fiercely opposed by many Tory MPs and peers who have raised concerns about the UAE, which provides the financial backing for 75% of Redbird IMI, and which has been criticised in the past for its record on press freedom.
Pressure has been building on the government all week after Lady Stowell, the Tory chair of the communications and digital committee, tabled an amendment to the digital markets, competition and consumer bill that would give parliament a veto on foreign governments taking over UK media organisations.
Her amendment was due to be debated on with a vote on Wednesday afternoon and has won the support of more than 100 MPs led by former minister Robert Jenrick.
Ministers recognised the strength of feeling among Tory backbenchers and have been in discussions with Stowell this week about whether she would drop her amendment if the government submitted alternative proposals.
The government confirmed on Wednesday it would propose legislation that would “ban foreign state ownership, influence or control of newspapers and periodical news magazines in the UK”. It will publish full details of the legislation on Tuesday but it is expected it could come in the form of an amendment to the 2002 Enterprise Act.
Details are yet to be set out, but one proposal is that the Competition and Mergers Authority (CMA) would be obliged to investigate whether a merger has, or would result in, foreign ownership, influence or control. The culture secretary could then issue an order blocking or unwinding the merger.
IMI has sought to reassure ministers and MPs during the bid process that it remained an “entirely passive investor” with no management or operational rights in relation to the Telegraph, and has said there would be an independent editorial trust board to protect editorial independence.
However the Department for Culture, Media and Sport noted in a letter to RedBird in January that IMI “is privately owned by a member of the UAE government” and said the government “remains concerned about the potential influence” of the fund, which owns 75% of the joint venture, over the Telegraph “which could affect the free expression of opinion and accurate presentation of news” in the newspapers.
after newsletter promotion
The latest moves in parliament do not affect the quasi-judicial decision Lucy Frazer, the culture secretary, must make in the coming days as she considers reports from regulators Ofcom and the CMA on the implications of the Redbird IMI deal.
She must decide whether to open a phase 2 investigation, where the CMA is given 24 weeks to assess whether the deal operates against the public interest and whether any remedies can be instigated to let the merger proceed.
The sale of the Telegraph group did not make it to a fully fledged auction process after the Redbird IMI intervention. Earlier this week, Bloomberg reported that Rupert Murdoch’s News UK and DMGT, which owns the Daily Mail, had shown interest in the Telegraph and Spectator assets and were monitoring the situation.