The United Arab Emirates-backed consortium RedBird IMI is considering a sale of its stake in the Telegraph, after its attempt to take over the media group was effectively scuppered by UK government plans to ban foreign state ownership of newspapers.
It paid £600m last November to clear the debts of the group’s owners, the Barclay family, but within days the transfer of control was put on hold amid an investigation into whether it raised public interest concerns.
Now the partnership between a fund backed by the UAE’s vice-president, Sheikh Mansour bin Zayed al-Nahyan, and the US investment firm RedBird Capital Partners is reassessing its position as ministers prepare to publish the foreign ownership legislation next week.
The Financial Times reported that RedBird IMI was now “leaning” towards a full sale of Telegraph Media Group, which also includes the Spectator magazine.
The joint venture is understood to be examining all options – including selling all or part of its stake or bringing in US investors to a new entity to replace UAE cash. No formal decision has yet been made.
Bloomberg also reported that the consortium was considering a sale, adding that Rupert Murdoch’s News UK and DMGT, which owns the Daily Mail, had shown fresh interest in the Telegraph and Spectator assets.
The government is expected to announce a proposed amendment to the Enterprise Act 2002 next week that would explicitly rule out newspaper and periodical news magazine mergers involving ownership, influence or control by foreign states.
After the plan was announced on Wednesday, RedBird IMI said it was “extremely disappointed”, having previously “believed the UK’s media environment was worthy of further investment”, adding it would “evaluate our next steps, with commercial interests continuing to be the sole priority”.
Lucy Frazer, the culture secretary, is also deciding on whether the Telegraph bid should go to a more detailed phase 2 regulatory investigation by the Competition and Markets Authority (CMA).
Lord Parkinson, the media minister, told the Lords this week that the proposed legislation would mean that in future media merger cases would be referred to the CMA, through a new foreign state intervention notice where there is reasonable grounds to believe that a merger involving a UK newspaper or news magazine has given, or would give, a foreign state or a body connected to a foreign state, ownership, influence or control.
The CMA would then be obliged to investigate the possible merger and, if it concludes the merger would result in foreign state ownership, then ministers would be required by statute to make an order blocking or unwinding the merger.
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The government will also expand on the current definition of “foreign powers” used in the National Security Act 2023 to ensure it covers officers of foreign governments acting in a private capacity and investing their private wealth.
However, many details of the proposed legislation are still unclear – including the threshold at which foreign governments could buy a stake in a newspaper publisher – although this is expected to be kept at a relatively low level.
The planned Telegraph takeover has been fiercely opposed by many Tory MPs and peers who have raised concerns about free speech given that the UAE, which provides the financial backing for 75% of RedBird IMI, has been criticised in the past for breaches of press freedom.