An investment fund backed by Abu Dhabi has confirmed plans to take ownership of The Telegraph “at the earliest opportunity”, prompting MPs on the Culture Select Committee to urgently discuss the implications for press freedom.
Redbird IMI, led by former CNN chief Jeff Zucker and funded mostly by Abu Dhabi royalty, is in line to take control of The Telegraph in a matter of weeks as part of its efforts to build an international media empire.
A spokesperson said: “Any transfer of ownership will of course be subject to regulatory review and we will continue to cooperate fully with the government and the regulator.”
It said The Telegraph’s operations would be fully managed at Redbird IMI by Abu Dhabi’s US private equity partner Redbird Capital, taking editorial matters away from the Gulf state.
The spokesperson continued: “International media investment [Abu Dhabi] There will only be one passive investor.”
“Redbird IMI is fully committed to retaining the existing editorial team of the Telegraph and Spectator publications, and believe that editorial independence for these titles is essential to protecting their reputation and credibility.
“We are excited by the opportunity to support the existing management of the titles to expand the reach of the titles in the UK, US and other English-speaking countries.”
The fund is also bidding in a £1bn auction of All3Media, Britain’s biggest independent television producer, the producers of BBC reality show The Traitors can reveal to The Telegraph. All3media declined to comment.
Redbird IMI wants to acquire ownership of The Telegraph by mid-December by helping to pay off a £1.2bn loan from the Barclay family to Lloyds Banking Group. The bank sent in receivers in June to take control of The Telegraph and The Spectator magazines after a lengthy dispute over unpaid loans and interest.
Redbird will provide the IMI family with a £600 million loan with a 12-month option to convert the loan into shares. Abu Dhabi will directly provide the Barclay family with funds to repay the balance of the loan, which will be secured by their other businesses, including online retailer Very.
Lloyd’s is currently assessing whether the repayment proposal overcomes the compliance hurdles in relation to anti-money laundering and so-called Know Your Client rules. If no problems are found it is legally obliged to return The Telegraph and The Spectator to the Barclay family, regardless of their plans to effectively sell the assets.
Redbird IMI said it would present its option to The Telegraph “at an early opportunity”, interpreted by insiders as almost immediately after Lloyds had assessed the offer and accepted payment.
MPs on the Commons culture committee are expected to hold private talks on the planned transaction on Tuesday, as there are calls to scrutinize it as a potential threat to free expression and even national security.
Dame Caroline Diniz, Conservative chair of the committee, said: “This is a complex and confusing situation – it is vital that the Department for Digital, Culture, Media and Sport closely scrutinizes the funding and ownership of any deal.”
The committee has the powers to initiate inquiries, summon witnesses and seek answers from officials. The Culture Secretary, Lucy Fraser, has a key role in the investigation, with powers to intervene to protect the public interest in free expression.
He recently told media executives: “My priority and that of this government will always be to stand behind our media and protect press freedom at every turn.”
The prospect of a majority-backed fund owning an influential news publisher by an autocratic Arab state has caused concern both outside and inside The Telegraph.
With more than half a dozen Conservative MPs already calling for an official investigation into the dealings, Dame Caroline’s comments are the latest sign of concern. Trade Secretary Kemi Badenoch and Security Minister Tom Tugendhat, both of whom are in the Cabinet, have privately expressed concerns.
In a note to newsroom staff on Monday, Chris Evans, editor of The Telegraph, said: “You are asking me how we can be sure that editorial independence will be protected. At the moment I don’t know more than what you may have read. For now, we must continue our work.”
While Lloyds has been examining the Barclay family’s offer for two weeks, a separate auction of The Telegraph and the transfer of the business to a new and unencumbered company, managed by Goldman Sachs, is underway. The consortium led by hedge fund boss Sir Paul Marshall and other bidders, including the publisher of The Daily Mail, have been urged to submit their first round of bids by November 28.
A spokesman for the Barclay family declined to comment.