The proposed takeover of The Telegraph Media Group — publisher of right-leaning U.K. newspaper the Daily Telegraph — by Jeff Zucker‘s Abu Dhabi-controlled investment group RedBird IMI is likely to be blocked by new legislation that bans the ownership of U.K. newspapers and news magazines by foreign governments.
The change will be in an amendment to the Digital Markets, Competition and Consumers Bill, which is being debated next week. Speaking for the government, culture minister Lord Parkinson said the new law would “rule out newspaper and periodical news magazine mergers involving ownership, influence or control by foreign states.” He added that the ban would not apply to broadcasters.
Under the new law, the government would refer proposed media mergers to the Competition and Markets Authority if there were grounds to believe a deal “would give a foreign state or body connected to a foreign state, ownership, influence or control,” Lord Parkinson said. The CMA would then investigate the merger and if it concluded that the deal would result in foreign state ownership, influence or control over a newspaper, the government would be required to block it.
A spokesperson for RedBird IMI said they were “extremely disappointed by [Wednesday’s] development.” They added: “We will now evaluate our next steps, with commercial interests continuing to be the sole priority.”
RedBird IMI, which recently struck a $1.45 billion deal to buy British TV giant All3Media, announced in November that it was going to take control of The Telegraph Media Group, which also owns the Spectator magazine, after agreeing to repay more than $1 billion in unpaid debts owned by the publishing groups’ previous owners, the Barclay Family. The Barclays had owned the group since 2004, but Lloyds Banking Group took control of it in June, with it being put up for sale in an auction run by Goldman Sachs.
But following the news that RedBird — a joint venture between private-equity firm RedBird Capital and the Abu Dhabi royal family-controlled International Media Investments — was set to acquire the group, Conservative politicians voiced concerns over the danger of foreign influence and requested that the British government investigate. Culture secretary Lucy Frazer later issued a notice triggering watchdog inquiries into the potential ownership of The Telegraph by an Abu Dhabi royal from a country with a poor record on press freedom.
Speaking in November, former CNN boss Zucker said that, should the RedBird IMI deal be approved, he saw an opportunity to to take the Telegraph into the U.S. market, telling the Financial Times that it was a “great, iconic brand that stands for quality journalism” and could provide an alternative to more liberal titles such as the New York Times and Washington Post.
He also promised to create an editorial advisory board at the Telegraph and the Spectator to safeguard their editorial independence.
“We feel confident that with those moves that there should be no question about the editorial independence of the Telegraph or Spectator,” he said. “I’ve spent 35 years running or supervising news organizations, and there’s nothing I understand more than editorial independence. I have staked my reputation and legacy on not allowing editorial interference.”
