The culture secretary intends to ask the media watchdog to examine the Barclay family’s proposed deal to hand control of the Telegraph and the Spectator magazine to a consortium backed by the UAE on public interest grounds.
Lucy Frazer said on Wednesday she was “minded to” call in Ofcom to look at the investment fund’s plans to take over the titles in exchange for repaying £1.15bn of the family’s debts to Lloyds Banking Group.
In a statement to parliament on Wednesday, Frazer said her department had written to Lloyds, the Barclay family and the consortium, RedBird IMI, to inform them she was minded to issue a public interest intervention notice (PIIN).
Frazer said: “This relates to concerns I have that there may be public interest considerations … that are relevant to the intended loan repayment by the Barclay family and the planned acquisition of Telegraph Media Group by RedBird IMI and that these concerns warrant further investigation.”
These grounds include the need for accurate presentation of news, free expression of opinion and – specifically regarding newspapers – a sufficient plurality of views and persons with control of ownership.
The culture secretary’s statement comes a day after the auction of the Telegraph was paused in light of the consortium’s announcement. Under that deal RedBird IMI – a joint venture between the US company RedBird Capital and International Media Investments (IMI) of Abu Dhabi – has agreed to repay the Barclay family’s debts to Lloyds, which seized control of the titles in June.
The terms of the agreement are that RedBird IMI would provide a £600m loan, secured against the Telegraph and the Spectator, and “a loan of a similar amount secured against other Barclay family businesses and commercial interests”.
IMI is the investment vehicle for Sheikh Mansour bin Zayed Al Nahyan, the vice-president of the United Arab Emirates, which also provides most of the funding for Redbird IMI. He also owns Manchester City football club.
IMI has investments including Middle Eastern digital and print newspaper the National, which has a UK edition and a London bureau and CNN Business Arabic. It also holds interests in Sky News Arabic and Euronews.
In Frazer’s letter to RedBird, she says that she is aware the investment fund has “links to media organisations that have been critiqued for partisan views and therefore believes there may be an impact on the plurality of views of newspapers in the UK, if RedBird IMI gain influence over Telegraph Media Group”.
Frazer has given the parties involved until 3pm on Thursday to make written representations to her department.
RedBird IMI, which is led by the former president of CNN Jeff Zucker, said that it planned to convert the loan into equity at “an early opportunity” and also promised that it would not look to interfere with the operations of the Telegraph.
A spokesperson said: “We welcome the opportunity to make further representations to the government, restating that if we gain ownership of the Telegraph and Spectator we will be fully committed to maintaining the existing editorial team of the publications and believe that editorial independence for these titles is essential to protecting their reputation and credibility.”
A number of Conservative MPs have written to the deputy prime minister, Oliver Dowden, the business secretary, Kemi Badenoch, and Frazer questioning the use of overseas sovereign wealth to buy the UK national newspaper.
“It is important to note that I have not taken a final decision on intervention at this stage,” said Frazer in the statement on Wednesday.
A Barclay family spokesperson said: “We will continue to engage constructively with the government on this matter.”
If asked, Ofcom will carry out a public interest test on the deal, reporting back within 40 days. If there are no concerns, Frazer must clear the deal. If Ofcom raises concerns, however, she must decide whether to accept an undertaking from the Telegraph’s new owners to address them.
If the culture secretary does decide to intervene by issuing a PIIN, the Competition and Markets Authority would also look at the change of ownership of the Telegraph to assess any potential competition concerns.
“Following these reports, I would need to decide whether to refer the matter for a more detailed investigation by the CMA,” Frazer said.
The Barclay family has until 1 December to complete due diligence with Lloyds and RedBird IMI and repay the debts, before an adjourned court hearing in the British Virgin Islands which would liquidate a company linked to the media group.
If the Barclay family has not repaid the debts by 4 December, it is not expected to oppose the liquidation of the holding company. A sale process would then resume.
