Britain to ban ownership of newspapers by foreign states, a blow to the telegraph bid

A bold attempt by US media executive Jeff Zucker and his Emirati backers to take over London’s Daily Telegraph appeared to be sidelined on Wednesday after the British government introduced legislation that would ban foreign state ownership of newspapers and news magazines.

Prime Minister Rishi Sunak’s move would torpedo Mr Zucker’s bid in its current form, which is heavily dependent on financing from investment partners in the United Arab Emirates. The use of Emirati funds caused an uproar at Westminster over foreign influence in the British media, given the outsized importance of The Telegraph and its sister publication, The Spectator, to Mr Sunak’s Conservative Party.

Mr Zucker’s media company, RedBird IMI, can now try to salvage its bid for the publications by finding new investors and diluting the Emiratis’ majority stake to a level allowed under the government’s proposed rules. His representatives had no immediate comment Wednesday.

The attempt by Mr. Zucker, a former president of CNN, to reinvent himself as an unlikely news mogul in Britain shocked many of the country’s top media players, including Rupert Murdoch, who had considered buying The Telegraph for himself to be taken after the newspaper had received publicity. auction last year.

Prominent Tories, including broadcaster Andrew Neil and Fraser Nelson, editor of The Spectator, attacked Mr Zucker’s dependence on Emirati funds, making the deal a political flashpoint for foreign influence over British institutions and the opposition of lawmakers from the Conservative Party was fueled.

The deal was already under review by British regulators. On Wednesday, Stephen Parkinson, Minister for Cultural Communications and Creative Industries, promised in the House of Lords to bring forward a change in the law that would prevent foreign state ownership of news publications. The law is expected to be passed by parliament, where the Tories have a healthy majority.

“We have listened carefully to the arguments of parliamentarians in recent weeks and are taking action to explicitly exclude foreign state ownership, influence or control over newspapers and periodical news magazines,” a government spokesperson said.

The resistance to the offer lay less with Mr. Zucker, who said he would not handle day-to-day operations at the newspaper, than with his main partner.

RedBird IMI is a joint venture between RedBird Capital, an American private equity firm, and International Media Investments, an Abu Dhabi investment fund controlled by Sheikh Mansour bin Zayed al Nahyan, Vice President of the United Arab Emirates and member of the Royal Family from Abu Dhabi.

Sheikh Mansour has already played a major role in Britain and has unnerved some with his ownership of Manchester City, a Premier League football club known for its deep pockets and aggressive financial tactics.

Critics cited that of the UAE autocratic government, a checkered human rights record and friendly ties to President Vladimir V. Putin of Russia as reasons to disqualify the bid for the 168-year-old Telegraph, often called The Torygraph because of its influence in conservative politics. These obligations, the lawmakers said, outweighed Mr. Zucker’s editorial record at CNN, as well as the investor group’s promise to make provisions to ensure the newspaper’s independence.

Michael Forsyth, a former Conservative minister in the House of Lords, said on Wednesday that the offer “is what it is, which is an influence strategy.”

“Money talks and ownership matter,” Mr Forsyth said, adding that such influence should not extend to investors linked to a government that “jails journalists, deports critics and shuts down all criticism, a country that belongs to the bottom of the class. in international freedom tables.”

Any hope that the opposition Labor party would back the deal disappeared earlier this week when shadow culture secretary Thangam Debbonaire declared that her party would break the deal if it took power after the general election expected later this year. Labor leads the Tories in most polls by around 20 percentage points.

“Labour is unequivocal and unequivocal on this point,” Ms Debbonaire told Mr Nelson, the editor of Spectator, in an interview. “Ownership by a foreign power is incompatible with freedom of the press, which is essential in a democracy.”

If Mr. Zucker withdraws his bid for The Telegraph, one potential buyer is Paul Marshall, a British hedge fund billionaire. Mr Marshall funded GB News, a fledgling television channel that has emerged as a kind of ambitious Fox News, providing a platform for populist firebrands such as Nigel Farage.

This is not the first time that Britain’s clubby media world has shown hostility towards outsiders. Murdoch’s purchase of The Times of London in 1981 was derided as a hijacking by one upstart Australian. Mr Murdoch, who also owns The Sun, is expected to become owner of The Spectator, a prestigious weekly newspaper.

Zucker’s odyssey to take over The Telegraph began last year, when Redbird IMI agreed to forgive $1.47 billion in debt owed by the newspaper’s previous owners, the Barclay brothers. The deal had to be approved by British regulators, who agreed to delay the decision until March.

As criticism grew, Mr. Zucker traveled to London several times to plead his case. Last week he appeared on a popular British podcast, ‘The News Agents’, and accused Mr Neil of opposing the deal only after he had sought chairmanship roles at The Telegraph and The Spectator and been rejected.

“This may come as a shock, but Andrew Neil is quite hypocritical on this issue,” Zucker said in the podcast. Mr. Neil responded that he had never sought a chairman position and said Mr. Zucker’s memory was playing tricks on him.

Mr Zucker has had better luck with another deal in Britain. Last month, RedBird IMI beaten a $1.45 billion deal to acquire All3Media, a production company that oversaw hits like “The Traitors” and “Fleabag.”

Benjamin Mullin And Stephen’s Castle reporting contributed