The Barclay family is expected to close a deal on Friday to regain control of the Telegraph and Spectator temporarily, as part of plans that would ultimately put the titles under the control of a consortium backed by the United Arab Emirates.
The Barclays have engineered a two-stage deal to control the future ownership of the titles, which were seized by Lloyds bank in June after the family failed to repay £1.16bn in debts.
The first part of the complex deal involves the repayment of the debt by RedBird IMI, a joint venture between the US company RedBird Capital and International Media Investments (IMI) of Abu Dhabi, the investment vehicle for the UAE vice-president Sheikh Mansour bin Zayed al-Nahyan.
On Wednesday, the Barclay family gave the government 48 hours’ notice that it would successfully complete due diligence of the debt repayment deal, which involves a £600m loan secured against the Telegraph and the Spectator and another loan of about the same amount secured against other Barclay assets such as the shopping business Very, with Lloyds and RedBird IMI.
The deal, which is on track to be completed on Friday, will mean a court hearing in the British Virgin Islands on Monday that would have liquidated a Barclay family holding company, effectively scuppering the repayment deal, will not go ahead.
However, the Barclay family will not regain control of the titles as an independent board will remain in editorial and operational control until government-ordered investigations by the media regulator Ofcom and the Competition and Markets Authority into the second part of the deal are completed in January.
Nevertheless, the government is drawing up a statutory instrument to legally ensure the standalone status of the Telegraph and Spectator for the course of the investigation.
When the takeover of the Express and Star national titles by the owner of the Daily Mirror was probed by the government, the competition regulator issued a “hold separate” order that remained in place for seven months because it escalated to an in-depth phase 2 investigation.
The second part of the Barclay’s deal will result in RedBird IMI, which is run by the former CNN chief Jeff Zucker, convert the loans into equity control of the Telegraph and Spectator at “the earliest opportunity”.
On Thursday, the culture secretary, Lucy Frazer, ordered an investigation into only the second part of the deal on public interest grounds over concerns about press freedom.
An investigation into the debt repayment plan, which could have scuppered the fast-track timeline the Barclays needed to get it done on time, was not ordered.
The deadline for both reports is 26 January 2024. On Friday, Ofcom issued an invitation to comment to third parties on its investigation with a deadline of 13 December.
If the investigations do not flag up any problems, then Frazer has to clear the deal. However, if they do, then RedBird IMI could face having to offer legally binding undertakings protecting the editorial and operational independence of the titles or the deal could even be blocked.
The CMA is unlikely to find any competition concerns as RedBird IMI does not have significant media holdings in the UK.
RedBird IMI has repeatedly given assurances that it will not look to exert control or influence over the editorial output of the Telegraph, and that the sheikh’s IMI is just a “passive” investor, although he supplies the bulk of the investment fund backing the joint venture.
The UAE’s record on media freedom has come under scrutiny since the potential deal to take control was announced, and a number of Tories and MPs, including Lord Hague and Iain Duncan Smith, have expressed concerns about the influential right-leaning paper being controlled by the UAE.
Earlier this week a group of 19 MPs, including Alicia Kearns, the chair of the foreign affairs committee, wrote to the deputy prime minister, Oliver Dowden, arguing that the proposed deal posed a “very real potential national security threat”.
They argued that the government should also invoke the National Security and Investment Act to fully investigate the deal, which they said would result in the Telegraph and the Spectator passing “into majority ownership by the UAE government”.
