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Why Abu Dhabi’s Telegraph bid is being examined and what it means


Culture Secretary Lucy Frazer confirmed on Thursday that the Government will officially intervene in the planned takeover of The Telegraph.

The move, which could lead to the deal being blocked or conditions being imposed, reflects concerns around freedom of expression and accuracy of news in the British press.

In a statement on Thursday, Ms Frazer said there were measures in place to ensure she acted independently and followed a process which is “scrupulously fair, transparent and impartial”.

What is a Public Interest Intervention Notice (PIIN)?

Lucy Frazer has decided to intervene in the proposed takeover of The Telegraph through a Public Interest Intervention Notice (PIIN). This mechanism, part of the Enterprise Act 2002, allows the Government to step in to scrutinise deals on public interest grounds. This may relate to national security or financial stability, as well as media ownership and plurality.

Culture Secretary Lucy Frazer
Lucy Frazer has decided to intervene in the proposed takeover of The Telegraph through a Public Interest Intervention Notice - Stefan Rousseau - WPA Pool/Getty Images

When has it been triggered before?

The PIIN is a relatively obscure government power that is only exercised on rare occasions. Recent examples in the media sector include the 2018 merger between Trinity Mirror and Northern & Shell, the Daily Mail’s takeover of the i newspaper and the sale of a 30pc stake in the Evening Standard and Independent to a Saudi Arabian investor.

Why is the Telegraph deal being examined?

The proposed takeover of The Telegraph has been engineered through a complex £1.2bn loan that will see former owners, the Barclay family, repay their debts to Lloyds Banking Group, which seized the newspaper alongside The Spectator in June.

Once this debt has been repaid, ownership of the titles will pass to the provider of the loan, which is RedBird IMI, a joint venture between the US private equity firm Redbird Capital and International Media Investments (IMI), a vehicle controlled by UAE deputy prime minister Sheikh Mansour bin Zayed al-Nahyan. This is known as a debt-for-equity swap.

A host of high-profile figures have called on the Government to block the deal amid concerns about the UAE’s authoritarian leadership and track record on press censorship. This week 14 Tory MPs wrote to Deputy Prime Minister Oliver Dowden warning that the takeover posed a national security risk.

CNN President Jeff Zucker,
Former CNN President Jeff Zucker is fronting the RedBird IMI bid to take control of The Telegraph - The Washington Post

Jeff Zucker, the former boss of CNN, who is fronting the bid, has vowed to ensure editorial independence after the deal goes through. RedBird IMI has said it will maintain the existing editorial team of the publications.

In her intervention notice, Ms Frazer said she “believes that it is or may be the case that a public interest consideration is relevant to a consideration of the relevant merger situation”. Specifically, the Culture Secretary cited the need for the accurate presentation of news and free expression of opinion in newspapers.

While the titles are being sold together, the process does not apply to The Spectator, as it does not pass a minimum turnover threshold of £70m.

What does it mean?

The decision to issue a PIIN means the deal will now be referred to the Competition and Markets Authority (CMA) and media regulator Ofcom for review. While Ofcom’s opinion will be merely guidance, Ms Frazer must take the CMA’s view on board.

Both bodies have been given a deadline of Jan 26 to report back, after which Ms Frazer can decide to block the deal, enforce conditions, or allow it to go through.

What happens now?

The regulatory review is only concerned with the debt-for-equity swap that would see ownership of The Telegraph transferred to RedBird IMI. The group has previously said it would exercise this option imminently.

This means that the £1.2bn loan arrangement between Redbird IMI and the Barclay family can go ahead as planned, allowing the debt to Lloyds to be repaid. Once the money is back in Lloyds’s bank account, The Telegraph and Spectator will be taken out of receivership.

This means the Barclays will regain control of the titles. However, the parties have said that the independent directors of the Telegraph will remain in place while the review process is ongoing.

What happens if the deal is blocked?

If Ms Frazer decides to block the deal, a suspended auction would be restarted. It has attracted bidders including a consortium led by the hedge fund founder Sir Paul Marshall and DMGT, the publisher of The Daily Mail.

In a less extreme scenario, RedBird IMI could face legally binding restrictions on how it is allowed to operate The Telegraph