Abu Dhabi takeover of Telegraph Group faces govt scrutiny

The UK government is considering the possibility of amending existing legislation to block the £600 million ($767m) takeover of Telegraph Media Group by Abu Dhabi-backed private equity firm RedBird IMI. Prime Minister Rishi Sunak is reportedly exploring the possibility of introducing new powers that would allow ministers to prevent a foreign state from owning a British news organisation.

According to the Financial Times, there is growing pressure from Conservative MPs to intervene in the deal due to the close links between the Telegraph and the ruling political party. The newspaper is lampooned by Private Eye magazine as the “Torygraph”. Downing Street is facing increasing calls to veto the purchase, with Conservative peer Baroness Tina Stowell introducing an amendment to the digital markets bill that would give the government the power to block a foreign state from making such a deal.

RedBird IMI, run by former CNN boss Jeff Zucker in New York, gets most of its funding from the UAE. IMI, the Abu Dhabi vehicle behind RedBird’s joint venture, is controlled by Sheikh Mansour Bin Zayed Al-Nahyan, a vice-president of the UAE. Sheikh Mansour also owns English Premier League football club Manchester City, and RedBird IMI recently agreed to buy British television production company All3Media for more than $1.4 billion.

READ: Lord Hague speaks out against ‘disturbing’ UAE bid to buy the Telegraph

The deal is said to have put Downing Street in an awkward position, given the government’s endorsement of Abu Dhabi funds flowing into the British economy through deals struck over key assets in the life sciences sector. The Labour Party has also voiced concerns about the takeover, with Shadow Culture Secretary Thangam Debbonaire stating that the deal “should not pass” as it is funded by a foreign power.

Two regulators, Ofcom and the Competition and Markets Authority (CMA), have submitted their initial findings on the takeover to Culture Secretary Lucy Frazer. While the CMA is unlikely to block the deal on competition grounds, analysts expect the Ofcom report to reflect concerns raised about ownership and independence.