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Foreign state investors will be allowed to take a stake of up to 15 per cent in British newspapers under government plans to allow media groups to tap into sovereign wealth to fund future deals.
A new statutory instrument — a form of legislation — is set to be put before parliament on Thursday, the government confirmed. It was reported earlier on Wednesday by the FT.
The decision comes after a deal by Abu Dhabi-backed RedBird IMI to acquire the Telegraph newspaper was blocked last year over fears of overseas state influence over a British national newspaper.
The then-Conservative government banned all foreign investment in British newspaper groups, although it was consulting on plans to allow passive investments of about 5 per cent.
Media executives had worried that dealmaking in the industry would be hit by excessively stringent rules, with the Labour government now aiming for a higher 15 per cent threshold.
Lisa Nandy, the culture secretary, will also on Thursday confirm plans to extend powers to scrutinise takeovers beyond traditional media to online news sites and magazines for the first time.
Nandy said: “We are fully upholding the need to safeguard our news media from foreign state control while recognising that news organisations must be able to raise vital funding.”
Executives in the UK have lobbied for greater flexibility, with companies such as Daily Mail owner DMGT having talked about a tie-up with investors from Qatar when it was considering bidding for the Telegraph.
Media executives are also concerned the law will hit state pension funds, such as the vast Norwegian, Canadian and Australian groups that are shareholders in listed media companies.
The decision should also give greater certainty for the future of the Telegraph, which has been without a permanent owner for two years.
A £550mn deal struck to buy the Telegraph Media Group by RedBird IMI — a joint venture between the US private equity firm and the Abu Dhabi investor — was blocked by the then-Conservative government owing to concerns over passing control of an influential newspaper to a foreign state-backed fund.
IMI — which is controlled by Sheikh Mansour bin Zayed al-Nahyan, a vice-president of the United Arab Emirates and owner of Manchester City football club — provided about three-quarters of the funding to RedBird IMI.
Currently, Gerry Cardinale’s RedBird Capital Partners is in pole position to take control of the Telegraph, according to people close to the situation. But they added that RedBird would probably seek to retain a small stake from IMI alongside other investors. RedBird declined to comment.
RedBird IMI is still in talks with other potential buyers, including Chelsea FC co-owner Todd Boehly and Dovid Efune, owner of The New York Sun.
The government’s decision may still prove controversial given the strength of the debate last year among MPs about the risks of allowing any influence on UK media by foreign states.
Tory MPs, in particular, were concerned about the potential for overseas control of a right-wing broadsheet that is influential for their party. The criticism of Abu Dhabi soured relations between the UK and the UAE, which is a major investor in Britain.
