Sunday, March 3, 2024

Tory MP raises fresh questions over Abu Dhabi-backed Telegraph deal | Business News

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A Conservative MP is urging ministers to extend a probe into the prospective takeover of The Daily Telegraph, warning that the Abu Dhabi-backed vehicle which wants to acquire it may already be exerting “material influence” over the newspaper.

Sky News has learnt that Neil O’Brien, a former health minister who sits on the Tory backbenches, wants the culture secretary to issue a public interest intervention notice (PIIN) which encompasses RedBird IMI’s repayment of a £1.2bn debt to Lloyds Banking Group on behalf of the Barclay family.

Mr O’Brien said that while Lucy Frazer had been right to issue a PIIN focused on the conversion of that debt into ownership of the Telegraph newspapers, she should go further by also subjecting the debt repayment to scrutiny from Ofcom and the Competition and Markets Authority.

This would, he said, be the only way to ensure that RedBird IMI could not challenge any subsequent action that the government may wish to take in relation to the deal.

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“It is clear that the Secretary of State is carefully considering the important issues around press freedom and national security raised by this deal,” he said.

“I am, however, deeply concerned by recent reporting that RedBird IMI told the Telegraph’s independent directors that it will determine the future ownership of the paper, even if their bid is blocked.

“This raises worrying questions about the level of material influence RedBird IMI, and therefore a foreign power, already holds over the paper through the debt arrangements currently in place, as well as the control they will still be able to exert even if the bid is blocked.

“It is vital that the Government retains control over the process and its ability to protect the free press in this country.

“In light of these new developments I think it’s crucial that the Secretary of State uses her powers to scrutinise this complicated deal by issuing a separate PIIN into the initial purchase of the debt.

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Lucy Frazer is being urged to broaden the inquiries she has ordered

“Doing so will give myself, parliamentary colleagues, Telegraph readers, and staff, full confidence in this process.”

Mr O’Brien’s comments come just two days before a deadline imposed by Ms Frazer for Ofcom and the CMA to submit their preliminary findings to her department.

Neil O'Brien
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Neil O’Brien is pictured during an appearance on Sky News last year

Many observers expect that the debt-for-equity swap will be referred by the CMA to a more in-depth Phase-II investigation that could leave the Telegraph’s future mired in uncertainty for months.

Sky News revealed recently that the Telegraph’s parent company’s independent directors had been notified by RedBird IMI that it intended to determine the titles’ future ownership even in the event that it is prevented from taking control of its shares.

The Gulf-based investor – a joint venture between RedBird of the US and Abu Dhabi-based IMI – had been keen to dispel the idea that either the independent directors or the Barclay family, the newspaper’s beneficial owners, would oversee any future auction.

Because RedBird IMI also owns a call option which can be exercised in exchange for ownership of the media assets, it believes it would be “in total control” of any process should the government block the acquisition, a source told Sky News earlier this month.

“In such an eventuality, RedBird IMI would be free to sell the loan and call option to whoever they wished,” they added.

Scores of MPs and peers have lined up to oppose the takeover, arguing that the UAE has a poor record of upholding journalists’ ability to report impartially.

A string of prominent Telegraph writers, as well as the editor of The Spectator – which also forms part of the transaction but is not subject to the PIIN – have complained publicly about the prospect of the Abu Dhabi-backed vehicle gaining control of influential British media assets.

However, RedBird IMI – whose bid is spearheaded by Jeff Zucker, the former CNN president – remains confident that the editorial protections that it has submitted to Ofcom will address any concerns and pave the way for the deal to be approved.

Under the terms of the PIIN issued by Ms Frazer, RedBird IMI is prohibited from exerting any influence over the titles while investigations by the competition and media regulators are ongoing.

That includes the removal of key executives and editorial staff or any attempt to merge the Telegraph with other assets.

However, Cormac O’Shea, the Telegraph finance chief, has since stepped down, and there is mounting speculation that Nick Hugh, the newspapers’ chief executive, is about to follow suit.

The Telegraph’s holding company was forced into receivership by Lloyds Banking Group last year, following a long-running dispute over the repayment of a £1.16bn debt.

The loans and interest were repaid in December after the Barclay family structured a deal with RedBird IMI, which is majority-owned by Sheikh Mansour bin Zayed Al Nahyan, the ultimate owner of Manchester City Football Club.

The Times reported last month that TMG’s independent directors had alerted Whitehall to possible irregularities in the accounts of the family’s media assets, with the National Crime Agency reportedly informed.

RedBird IMI’s move to fund the loan redemption circumvented an auction of the Telegraph which drew interest from a range of bidders.

The hedge fund billionaire and GB News shareholder Sir Paul Marshall, Daily Mail proprietor Lord Rothermere and National World, a London-listed local newspaper publisher, had all hired advisers to assemble offers for the newspapers.

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