UK

Abu Dhabi-backed Telegraph bidder rejects plan to ease press freedom fears

Christopher Williams
Fri, 8 December 2023 

telegraph newspaper

The prospective owners of The Telegraph have rejected a plan to reduce the share of Abu Dhabi cash behind the takeover and ease concerns over press freedom.

Jeff Zucker, the former CNN chief leading RedBird IMI, has ruled out restructuring or bringing in new investors to appease regulators, insiders said.

Some 75pc of the $1bn (£790m) fund is provided by International Media Investments (IMI), an Abu Dhabi vehicle controlled by Sheikh Mansour bin Zayed al-Nahyan, the Manchester City owner and vice-president of the United Arab Emirates. The rest is derived from RedBird, a US private equity firm with institutional and family office backing.

It is understood The Telegraph’s independent directors proposed that reducing IMI’s interest to a minority or even 25pc of The Telegraph’s £600m price would help them win a crucial recommendation from Ofcom to the Culture Secretary Lucy Frazer.

However, multiple sources confirmed that Mr Zucker firmly rejected the idea.

Bidders in an auction that has since been abandoned had been warned that any more than 25pc funding from the Gulf would not be acceptable to the Government.

Multiple sources confirmed that Mr Zucker firmly rejected the idea of reducing IMI’s interest in The Telegraph - Clara Molden for The Daily Telegraph

RedBird IMI’s subsequent ambush via a complex debt transaction that would leave The Telegraph three-quarters backed by Abu Dhabi has prompted legal questions which are still being examined by rivals and officials.

An Ofcom team is investigating the impact of the proposed RedBird IMI takeover on the public interest in free expression and the accurate presentation of news.

It is due to deliver a report to Ms Frazer by January 26 with advice on how to proceed. She will then decide whether to allow the takeover to go ahead, negotiate remedies to protect press freedom with RedBird IMI, or refer the controversy to the Competition and Markets Authority for deeper scrutiny.

RedBird IMI has been exploring ideas such as an editorial board in the hope that such “behavioural” remedies may satisfy Ofcom. However, regulators tend to prefer “structural” remedies such as the dilution proposed by The Telegraph’s independent directors as they are viewed as more robust and do not require ongoing monitoring.

The Telegraph’s independent directors, led by chairman Mike McTighe, were put in place by Lloyds Banking Group when it seized control in June by appointing receivers.

Ofcom will deliver a report to Culture Secretary Lucy Frazer by January 26 with advice on how to proceed with the takeover - Wiktor Szymanowicz/Anadolu

After the Barclay family repaid an overdue £1.2bn debt on Monday using cash borrowed from RedBird IMI and directly from IMI, the receivership ended and the bank withdrew.

However, the directors were kept in place by a legal order issued by Ms Frazer, as well as under a commercial agreement between RedBird IMI and the Barclay family, who are barred from influencing The Telegraph as a result.

It is understood that based on conversations with the Barclay family and the former Cabinet minister Nadhim Zahawi, RedBird IMI had expected to be able to convert its loan to ownership of The Telegraph almost immediately with relatively low regulatory hurdles to clear.

Instead, the deal is held in limbo for regulatory scrutiny which the media analysts Enders have said could take until 2025 including a break for a general election.

Insiders said the reality of a potentially lengthy regulatory process had damaged trust between RedBird IMI and the Barclay family. Another denied this insisting the relationship was strong and that Ms Frazer’s intervention had been obviously inevitable, however.

A spokesman for the Barclay family declined to comment. Mr McTighe and RedBird IMI also declined to comment.

Mr Zucker has previously said he is committed to editorial independence for The Telegraph and that concerns about the involvement of Abu Dhabi were misplaced. He also pledged investment in growth and support for the existing newsroom team.

In recent days Mr Zucker has been contacting MPs and other influential figures to continue making his case.