Foreign state ownership of UK newspapers to be banned amid Telegraph takeover bid
FOREIGN state control of British newspapers is to be outlawed, effectively blocking the UAE’S attempted takeover of The Telegraph.
Ministers revealed plans yesterday to “explicitly rule out newspaper and periodical news magazine mergers involving ownership, influence or control by foreign states”. The move, announced by Lord Parkinson, the culture minister, was made to see off a rebellion being led by a Tory peer and sparked by The Telegraph’s situation.
Redbird IMI, a fund 75 per cent backed by Sheikh Mansour bin Zayed Al Nahyan, the UAE vice-president, had positioned itself to take control of The Telegraph and The Spectator magazine by repaying the debts of the Barclay family, the current owners.
The takeover has been in limbo under scrutiny from the Government using existing powers to protect press freedom, but MPS and peers across Parliament have demanded tighter laws against foreign state control.
During the debate in the Lords yesterday, peers argued that letting a foreign state own a British newspaper would be “outrageous” and “inconceivable”. The new law will be made by an amendment to the Digital Markets Bill but will change the wording of the existing Enterprise Act. It could become law within weeks.
What remains unclear is exactly what percentage of foreign state ownership would amount to “influence” under the proposed change. The amendment is yet to be published.
Lord Parkinson said the amount of overall ownership by a foreign state entity that would be allowed would be “very low” but gave no figure. Under other legislation, the threshold for a stake to be considered controlling is 25 per cent. Some UK news organisations already are part-owned by foreign state bodies. Peers noted Norway’s investment fund has holdings in various UK media outlets, via the stock market. It is understood the new ban would not be retrospective, so existing foreign state involvement in British news organisations, such as the Saudi stake in The Independent, would be unaffected.
It leaves Redbird IMI with a decision to make on whether to attempt to restructure to dilute the UAE funding to a level that might be acceptable under the new regime. Last night, Redbird IMI appeared to signal it could reconsider
its pursuit in response to the new laws. A spokesman said: “We are extremely disappointed by today’s development. To date, Redbird IMI has made six investments across the UK and US, and we believed the UK’S media environment was worthy of further investment.
“We will now evaluate our next steps, with commercial interests continuing to be the sole priority.”
It marks a significant turning point in wrangling over the future ownership of The Telegraph, which was seized from the Barclay family by Lloyds Banking Group in a dispute over £1.2bn of overdue debt. Redbird IMI helped repay the family’s debt in December with a new loan that it aimed to convert into ownership of The Telegraph and The Spectator. The Barclay family regained ownership but are barred by law from exercising any control over the titles, which are being run by independent directors.
The involvement of the UAE in Redbird IMI had triggered concerns to be raised about press freedom by MPS and peers from across political divides.
Baroness Stowell, the Tory chairman of the Communications and Digital Committee, had tabled an amendment to give Parliament a veto on foreign state takeovers of UK papers. But moments before a vote was due to take place in the Lords yesterday, Lord Parkinson announced that the Government would put forward its own change. He said: “We will amend the media merger regime explicitly to rule out newspaper and periodical news magazine mergers involving ownership, influence or control by foreign states.”
He explained how the new regime will work: “Under the new measures the Secretary of State [for Culture] would be obliged to refer media merger cases to the Competition and Markets Authority through a new foreign state intervention notice where she has reasonable grounds to believe that a merger involving a UK newspaper or news magazine has given or would give a foreign state or body connected to a foreign state, ownership, influence or control.
“The CMA would be obliged to investigate the possible merger and if it concludes that the merger has resulted or would result in foreign state ownership, influence or control over a newspaper enterprise the Secretary of State would be required by statute to make an order blocking or unwinding the merger.”
Lord Moore, a former editor of The Daily Telegraph, said: “At the Daily Telegraph we’ve always been very proud advocates and practitioners of a free press, but we haven’t particularly enjoyed having to advocate it quite so hard and quite so repeatedly in order to get the message across.”
Baroness Fleet, a former deputy editor of the paper, said: “Since the 7th of October the newspaper has boldly championed the right of Israel to defend itself against Islamic terrorism. The idea that an Arab owner – any Arab owner – of The Telegraph or any other newspaper would allow its editor to support Israel and criticise pro-palestinian anti-semites is an absurd notion.”
She added: “Allowing that [a minority stake] would also endanger The Telegraph. There would be nothing to stop the rich minority shareholder offering an extremely tempting fortune to a co-shareholder for their stake. That would give Abu Dhabi a majority interest – just what the proposed amendment seeks to avoid.”