The UK government intends to introduce new legislation on foreign government ownership of UK media in a move that could scupper the planned £600m sale of the Telegraph to a UAE-backed consortium.
RedBird IMI – a partnership between International Media Investments, a fund backed by the UAE’s vice-president and Manchester City owner Sheikh Mansour bin Zayed Al Nahyan which owns regional media properties including English language daily The National and Sky News Arabia, and the US investment firm RedBird Capital Partners – is seeking to acquire the group that owns the Telegraph and Spectator Magazine. The partnership also recently acquired Hollyoaks producer Lime Pictures’ parent All3 Media.
However, the planned takeover has been fiercely opposed by many Tory MPs and peers who have raised concerns about the UAE’s record on press freedom – the UAE side of the partnership provides 75% of RedBird IMI’s financial backing.
Lady Stowell, the Conservative 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 has won the support of more than 100 MPs and ministers have reportedly acknowledged the strength of feeling among Tory backbenchers over the issue.
The government has today confirmed it would propose legislation that would “ban foreign state ownership, influence or control of newspapers and periodical news magazines in the UK,” in a move that could placate Stowell sufficiently to drop her amendment. It will publish full details of the proposed legislation next week.
The plans could oblige the Competition and Mergers Authority (CMA) to investigate whether a deal 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 bidding process that it remained an “entirely passive investor” with no management, operational or editorial control at 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 could affect the free expression of opinion and accurate presentation of news.”
Culture Secretary Lucy Frazer is also due to report back imminently as she considers reports from regulators Ofcom and the CMA on the possible implications of the RedBird IMI deal.
Frazer, who has previously said she is “minded to” intervene in the deal in the public interest, could open a ‘Phase 2 investigation,’ which would give the CMA 24 weeks to assess whether the deal operates against the public interest and whether any remedies can be instigated to allow it to proceed.
The planned sale of the Telegraph group via auction was halted by the RedBird IMI intervention, although News UK and DMGT are both believed to be interested in buying the Telegraph should the process be reopened.
