Rishi Sunak might give ministers the power to prevent a foreign country from owning an English news organization.This comes as the pressure from the Conservative Party to block the takeover by Abu Dhabi-backed RedBird IMI of Telegraph Media Group is increasing.
According to sources close to the situation, the British Prime Minister is looking into the possibility of amending current legislation, such the 2002 Enterprise Act to give the government power to intervene.
Downing Street faces increasing pressure from Conservative MPs who want to intervene on the takeover by Redbird IMI of Telegraph Media Group for £600mn, due to the close ties between the newspaper and Tories.
The latest move from Number 10 comes following a Conservative peer, Baroness Tina Stowell, who introduced an amendment to the Digital Markets Bill which is currently being debated in parliament. This amendment would give the government the power to veto the purchase of a British media organisation by a foreign country.
The House of Lords will vote on the amendment on Wednesday. If it passes, the bill goes back to the Commons where more than 100 MPs have already backed it.
Stowell and the government are in discussions about Stowell’s amendment. If a better proposal is presented in time, then Stowell will be dropped from her position. Stowell and Downing Street declined to comment.
Sunak’s possible intervention comes after two regulators who are investigating Redbird IMI’s takeover Telegraph Media Group presented their initial findings on Monday to Culture Secretary Lucy Frazer.
The recommendations from media watchdog Ofcom and Competition and Markets Authority remain confidential until Frazer decides whether or not to approve the deal, or refer it to competition watchdogs for an in-depth examination — a process that could last months.
Many MPs, media analysts and political commentators expect Frazer will request a CMA second-phase investigation rather than risk the political backlash of approving this deal.
RedBird IMI owns no other news groups, so the CMA has little reason to block the deal on the basis of competition. Analysts expect that the Ofcom report reflects some of the concerns expressed about ownership and independence.
Ofcom stated that “publication and decision-making on the way forward are matters of the secretary of State”.
Downing Street is in a difficult position, as the deal involves Abu Dhabi funds that are flowing into the British market via key assets in life sciences.
RedBird IMI, the Abu Dhabi vehicle behind RedBird’s joint venture, is controlled by Sheikh Mansour bin Zayed Al Nahyan. IMI is the Abu Dhabi vehicle that supports RedBird’s joint venture. It’s controlled by Sheikh Mansour Bin Zayed Al Nahyan. He is a Vice-President of the UAE.
Sheikh Mansour is the owner of Premier League football team Manchester City. RedBird IMI agreed last month to purchase a British TV production company, All3Media for more than £1.1bn.
Labour Party could also raise objections over the Redbird IMI acquisition after Thangam Debbonaire told the Spectator, a magazine that is part of Telegraph Media Group’s Telegraph Media Group. He said the deal had been “done by a foreign power and funded by the UAE deputy prime minister. . . Should not Pass”.
According to a source close to the matter, Labour does not endorse Debbonaire’s position. The person also noted that the Labour Party wants to attract and retain foreign direct investment.
Any change in the view of the main opposition party, given that Labour is leading the Conservatives in the opinion polls ahead of a general election due later this year could pose a problem for the Redbird IMI agreement. A thorough CMA investigation would likely last until after elections.
If political opposition makes the deal unviable, RedBird IMI will be forced to bring in additional money to dilute their ownership of Telegraph Media Group.
People familiar with the situation say that some previous bidders have approached RedBird IMI to offer investment.
Redbird IMI, the company that owns the Daily Mail and millionaire Paul Marshall, who runs a hedge fund, registered their interest in an auction prior to the agreement between Redbird IMI and Redbird IMI for the purchase of the Telegraph. DMGT, Marshall and News Corp refused to comment.