The UK government has explicitly ruled out direct foreign ownership of British newspapers in an amendment to a bill that would effectively block the takeover of Telegraph Media Group by RedBird IMI, backed by Abu Dhabi.
The new Whitehall regime will ban direct investment by foreign states in UK newspapers, regardless of their size. This is according to the legislative amendment published on Thursday by the government.
The ministers also want a stronger definition of a foreign state and how much it can be perceived to control or influence a publication or news magazine than what is in the National Security Act.
RedBird IMI has already begun to consider a possible sale of the Telegraph in response to the government’s decision last week that prohibited any foreign state from being the owner or controlling a British paper.
People familiar with the situation say that potential bidders have been contacted in case the auction is held again. The joint venture between US fund management company RedBird Capital, and Abu Dhabi investment vehicle International Media Investments, could also bring in alternative investors to replace Abu Dhabi’s funds.
The proposed amendment will define foreign power as the head of the foreign state, the foreign government or part thereof, an agency of the foreign government, the authorities responsible for the administration of the affairs of a region within a country abroad, governing parties and officers of the governing parties.
The restriction will apply to the ownership, control, or influence of UK newspapers or news magazines by individuals associated with the state, other than sovereigns or heads of state, and ministers who invest their own wealth. This is to ensure that always possible are captured in which an external state might seek to gain control over or influence a UK news magazine or newspaper.
The changes in legislation that is being debated by the Parliament would prevent RedBird IMI from acquiring the Telegraph for £600mn.
A secondary law will be introduced by the government to provide a specific and narrow exemption for passive investment below a certain threshold.
The so-called passive shares held by sovereign wealth funds such as Norway, which own listed British media companies, will be allowed.
IMI is owned by Sheikh Mansour bin Zayed Al Nahyan. He is the vice president of the United Arab Emirates, and the owner of Manchester City Football Club. RedBird IMI received around 75% of its funding from IMI. RedBird IMI declined to provide a comment.
The government’s amendment was presented on Thursday after the publication of an open letter from the Culture Secretary Lucy Frazer to the bid vehicle for RedBird IMI, detailing why the Competition and Markets Authority (the antitrust watchdog) is expected to refer a sale of the Telegraph into a phase two investigation.
The UK government will have more time after the in-depth review to amend the law and formally block this deal. This includes the Spectator Magazine and was opposed by a large number of MPs.
The letter refers back to a report from Ofcom, the media regulator, which cites concerns about public interest issues surrounding the deal. Ofcom stated that there were “evidences of the UAE government’s approach to freedom of expression, which, given their close ties to IMI, could indicate IMI’s propensity for exercising influence to curtail the freedom of speech in the Telegraph titles”.
The Telegraph said that IMI has “clear political and wider commercial incentives” to influence editorial lines, especially in matters related to the UAE’s broader interests and political concerns. . . “in a manner that could negatively impact the accurate presentation and expression of news”.
National World, a regional media group, had earlier said that it was interested to purchase the Telegraph in the future. It described itself as “the best qualified candidate” amongst the other candidates.