A LibDem attempt in the Lords to block foreign state-owned investors from holding a 15% stake in UK newspapers has been defeated by the Government, with Tory front bench backing, reopening the door to Manchester City owner and UAE vice president Sheikh Mansour bin Zayed Al Nahyan and the RedBird IMI investment consortium to acquire the Daily Telegraph.
The deal most recently appeared to be back on in May, when the Department for Culture, Media and Sport announced that it was changing ownership rules. to allow foreign states to own up to 15% of British newspapers. However, The LibDems then launched an attempt in the House of Lords to prevent the threshold being raised from the previously proposed 5%. That proposal has now been defeated by 267 votes to 155, majority 112.
Although the Tory front bench backed the 15% move, the vote still saw a major Conservative rebellion, with 41 Tory peers defying the whip to back the so-called “fatal motion.”
Opponents of raising the foreign investment cap argued it would lead to undue external government influence and pose a direct threat to the freedom of the British press, while supporters insisted it was needed to secure scarce funding and protect the future of the UK media.
The approval by the Lords, already agreed in the Commons, paves the way for the takeover of The Telegraph after two years of uncertainty for the 170-year-old newspaper.
A previous buyout was blocked by the then Tory government after introducing new rules to stop foreign state ownership of the press.
RedBird IMI was then majority-owned by Al Nahyan. However, under a deal struck earlier this year, RedBird Capital, the US junior partner in the investment fund, is seeking to buy a majority stake in the group for £500m.
Abu-Dhabi’s IMI, owner of Sky News Arabia and publisher of The National newspaper in the UAE, would therefore look to take a minority holding as part of the consortium, in line with the new 15% limit.
Press Gazette reports that the Daily Mail and General Trust (DMGT) – which owns the Daily Mail, Mail on Sunday, the i Paper, and Metro – could also be looking to buy a stake.
Media minister Baroness Twycross said the rules would only allow backing from state-owned investors such as sovereign wealth funds and pension schemes, and not governments (or autocratic monarchies) themselves.
She told peers: “It does not apply to states themselves or other state bodies, so a foreign Government cannot buy and own a newspaper.”
She added: “The regulations include a strict requirement that the state-owned investor must hold the investment passively.
“They must have no right or abilities to appoint or fire directors or other officers, and they must have no ability to direct, control or influence a newspaper’s policy or activities.”
Lord Fox, the LibDem peer who brought the motion to stick to the lower threshold countered: “At the heart of the Government’s defence of these 15% ownership tranches is that the ownership will be passive. Traffic humps are passive, but they certainly change the way we drive.
“It seems that the minister’s view is that the investors will just sit back, not caring about the business and editorial direction their considerable investment will be taking. This is just not plausible.”
RedBird IMI last year completed the takeover of All3Media, the UK’s largest indie with 50 labels including Liverpool’s Lime Pictures, Leeds’ Wise Owl Films, Studio Lambert, Raw, Two Brothers and Neal Street Productions, making shows such as The Traitors, Squid Game: The Challenge, Gold Rush, Midsomer Murders, American Nightmare, The Circle, Call the Midwife, The Tourist, Life On Our Planet, The Long Shadow and Gogglebox.
