Just how exercised should we be at the prospect of an investment fund backed by a foreign government taking ownership of two flagship British news publications?
Over the weekend, several Conservative MPs wrote to ministers demanding an investigation into the proposed takeover of the Daily Telegraph and Spectator by RedBird IMI, a joint venture between RedBird Capital, an American outfit, and International Media Investments, which is linked to the government of Abu Dhabi in the United Arab Emirates.
In the letter, first published by Bloomberg, the MPs claimed that: “Material influence over a quality national newspaper being passed to a foreign ruler at any time should raise concerns, but given the current geopolitical context, such a deal must be investigated.”
On the face of it, it doesn’t seem an unreasonable concern. The United Kingdom has historically been very relaxed about foreign ownership of domestic companies – Sheikh Mansour bin Zayed, the Vice-President of the UAE and who is reportedly involved in the deal, already owns Manchester City FC.
And it was Margaret Thatcher – whose heir Rishi Sunak professedly aspires to be – who faced down opposition from her own ministers and facilitated Rupert Murdoch’s takeover of the Times and Sunday Times.
This relaxed approach has its advantages. Murdoch’s consolidation of his News International stable set the stage for the Wapping Dispute, which broke the power of the print unions and transformed the newspaper industry; foreign investment has turned the Premier League into a global export.
Yet in recent years there has been growing awareness amongst politicians of the costs of this laissez-faire approach – most obviously the threat of having IP stolen by foreign powers, as illustrated by the row over Newport Wafer Fab and the passage in 2021 of the National Security and Investment Act, as well as the frequency with which British start-ups and new technologies get bought out and brought to maturity in the United States.
The concerns arising from the sale of a newspaper are obviously somewhat different; nobody is going to take the Spectator or the Telegraph overseas and neither are likely sitting on valuable proprietary technology. But it would be reckless of the Government not to take a close interest in the acquisition of significant national publications by a group linked to a foreign government.
For their part, the buyers are keen to stress that the Emiratis won’t have any direct involvement. Per a quote given to the Press Gazette:
“Following transfer of ownership, RedBird Capital alone will take over management and operational responsibility for the titles under the leadership of RedBird IMI chief executive Jeff Zucker. International Media Investments will be a passive investor only.
“RedBird IMI are entirely committed to maintaining the existing editorial team of the Telegraph and Spectator publications, and believe that editorial independence for these titles is essential to protecting their reputation and credibility.”
Zucker is a former president of CNN, so at least has a media background. And if this is correct then actual control of both publications would be in the hands of the Americans, which would presumably raise fewer hackles.
If so, there doesn’t seem that much to distinguish this arrangement from Murdoch’s acquisitions in the Seventies and Eighties, at least operationally. But the even passive involvement of a foreign government, or its financial wing, ought at the very least to warrant extremely rigorous scrutiny.
That leads to the second potential problem. The way this deal has come about is that RedBird IMI is offering the Barclay brothers, who currently own the Spectator and Telegraph titles, a £600m loan, secured against the publications. The brothers are under pressure to do the deal, since if they can’t settle a £1.16bn debt with Lloyds by 1 December their holdings could be liquidated outright.
(International Media Investments is putting up the other £600m in a separate loan, “secured against other Barclay family businesses and commercial interests”.)
Under the terms of the deal, RedBird IMI can convert the debt into equity in the publications – and “intends to exercise this option at an early opportunity”, thus taking ownership.
The problem with this is that it short-circuits the normal bidding process, much to the chagrin of others, such Sir Paul Marshal, a major stakeholder in GB News and owner of UnHerd, who had been preparing to try and buy them. Per the BBC:
“Other bidders interested in the publications are seeking clarity on whether the auction process will still go ahead. They are also exploring legal options to ensure RedBird IMI’s Gulf backers are subject to the same levels of regulatory scrutiny their bids would have been subject to.”
The Government has form for intervening in such deals: in 2019 Jeremy Wright, the then-Culture Secretary, ordered the Competition and Markets Authority to investigate the sale of stakes in the Independent and Evening Standard to an investor with links to Saudi Arabia. It isn’t obvious from here what harm there would be in Lucy Frazer doing the same thing now.
Yet it also seems unlikely, if the deal is as stated, that there would be grounds to block it, provided that proper safeguards for editorial independence were in place and International Media Investments is genuinely an entirely passive investor. There may be grounds for an outright ban on funds linked to foreign governments buying significant stakes in British media, but that is not current policy.