The government has dealt a blow to the Barclay family’s efforts to strike a deal to transfer control of the Telegraph newspaper and Spectator magazine to a consortium backed by the UAE, after confirming that it is launching an investigation into whether it raises serious public interest concerns.
The culture secretary, Lucy Frazer, has issued a public interest intervention notice (PIIN) triggering an in-depth inquiry by Ofcom, the media regulator, into whether the complex deal could breach requirements including the need for accurate presentation of news, free expression of opinion and sufficient plurality of views and persons with control of ownership.
The Barclays are attempting to push through a deal with Lloyds Bank, which took control of the titles in June after the family failed to repay £1.16bn in debt, under which the investment firm RedBird IMI would repay the loans and swiftly move to convert them into equity to take ownership of the titles.
RedBird IMI is a joint venture between the US company RedBird Capital and International Media Investments (IMI) of Abu Dhabi, the investment vehicle for Sheikh Mansour bin Zayed Al Nahyan.
The sheikh, who also provides most of the funding for RedBird IMI, is vice-president of the United Arab Emirates and owns Manchester City football club.
On Thursday, Frazer confirmed that she had written to the Barclay family and to RedBird IMI, and said the Competition and Markets Authority (CMA) would now look at any competition issues, while Ofcom will “report on the media public interest consideration […] namely, the need for accurate presentation of news and free expression of opinion in newspapers”.
She added that procedures were in place “to ensure that I act independently and follow a process which is scrupulously fair, transparent and impartial”.
The deadline for both reports is 26 January 2024.
If the investigations do not flag any issues then Frazer has to clear the deal. However, if they do then RedBird IMI could face having to offer legally binding undertakings protecting the editorial and operational independence of the titles.
While the move by the government creates further uncertainty over the ultimate new owner of the titles, it is not a complete setback. The Barclay family and RedBird IMI had feared a wider investigation into the first part of the two stage deal – involving the debt repayment to Lloyds – which they are in the process of completing.
The second stage of the deal, whereby RedBird IMI will convert the loans to ownership of the Telegraph, is the subject of the government’s investigation order.
Journalists, media watchers and Conservative MPs have expressed concerns about the proposed takeover. Amnesty International said the deal would have serious implications for press freedom in the UK, while the Telegraph published a leader stressing that its editorial independence must be guaranteed.
A letter sent by Tory MPs that said “influence over a quality national newspaper being passed to a foreign ruler at any time should raise concerns [and] must be investigated”.
Jane Martinson, author of You May Never See Us Again, a book about the Barclay family and the empire they built, welcomed the move.
“It means a regulator gets to decide the merits of a case involving not only the house bible of the Conservative party but a cash-rich ally the current government is very keen not to annoy,” she said.
While Lloyds would want to clear the debt as soon as possible, a rushed deal was “no way to sell an important newspaper title at such a politically sensitive time, let alone to a nation state with such a poor record on press freedom”, she added.
A RedBird IMI spokesperson said: “We welcome the opportunity to provide the government with the information needed to scrutinise our deal, and we will continue to cooperate fully with the government and regulator throughout this process.
“RedBird IMI remains entirely committed to maintaining the existing editorial team of the Telegraph and Spectator publications and believes that editorial independence for these titles is essential to protecting their reputation and credibility.”
The investment fund’s bid is being led by the US media executive Jeff Zucker, who ran CNN from 2013 until last year. Zucker has insisted IMI, which owns CNN Business Arabic, Sky News Arabia and Euronews, would “remain a fully passive investor” and would not “exercise any control” over the Telegraph.
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 of the Telegraph and Spectator would then resume.
The government’s decision to launch an investigation is likely to be welcomed by rival bidders, which include GB News co-owner Paul Marshall and the Daily Mail owner Lord Rothermere.
Steven Barnett, professor of communications at the University of Westminster, said: “This is exactly what RedBird IMI didn’t want and Lloyds Bank will be furious.
“But Associated Newspapers and Paul Marshall will be pleased, as well as the Tory MPs on the right of the party who want to ensure that either [Rothermere or Marshall] are the ones that come out victorious.”
Media analyst Alex DeGroote said while the intervention would delay the process, it was unlikely to derail it entirely, with the government likely to seek explicit reassurances that the Abu Dhabi funders would not interfere.
“I don’t think RedBird IMI will be hugely surprised by this,” he said. “I think the deal will go ahead, as there isn’t a big enough reason for it not to.”
