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Rishi Sunak is considering introducing new powers to allow ministers to prevent a foreign state from owning a British news organisation, as pressure grows within the ruling Conservative Party to block the takeover of Telegraph Media Group by part of RedBird IMI, supported by Abu Dhabi.
Britain’s prime minister is exploring amending existing legislation, such as the Enterprise Act, to give the government the power to intervene, according to several people familiar with the situation.
Downing Street is under growing pressure from the Conservatives to intervene in Redbird IMI’s £600 million bid for the owner of the Daily Telegraph, given the newspaper’s close links to the ruling party.
Number 10’s latest move comes after Conservative Baroness Tina Stowell introduced an amendment to the Digital Markets Bill, currently going through parliament, to give the government the power to veto a foreign state that buys a British news organisation.
The measure will be voted on in the House of Lords on Wednesday and, if passed, the bill would return to the House of Commons, where it already has the support of more than 100 MPs.
The government is in talks with Stowell to withdraw his amendment if he submits an alternative proposal in time. Downing Street and Stowell declined to comment.
Sunak’s possible intervention comes as the two regulators examining the deal for the Telegraph presented their initial findings to culture secretary Lucy Frazer on the proposed takeover on Monday.
The recommendations from media watchdog Ofcom and the Competition and Markets Authority will remain confidential until Frazer has decided whether to allow the deal to proceed or refer it to the competition watchdog for a thorough review – an investigation that could take months.
Many lawmakers and media analysts expect Frazer to call for a second phase investigation rather than face the political storm of approving the deal.
The CMA is unlikely to have any reason to block the deal on competition grounds – RedBird IMI does not own any other news groups – but analysts expect the Ofcom report to reflect some of the concerns raised about ownership and independence.
In a statement, Ofcom said that “the publication of our advice and any decision on how to proceed lies with the Secretary of State”.
The deal is inconvenient for Downing Street given that the Government has approved Abu Dhabi funds flowing into the British economy through deals struck on key life sciences assets.
RedBird IMI is run by former CNN chief Jeff Zucker in New York, but receives most of its funding from Abu Dhabi. IMI, the Abu Dhabi vehicle behind the RedBird joint venture, is controlled by Sheikh Mansour bin Zayed Al Nahyan, vice president of the United Arab Emirates.
Sheikh Mansour owns Premier League football club Manchester City, while RedBird IMI last month agreed to buy a British TV production company, All3Media, for more than £1.1 billion.
There were also signs that the opposition Labor Party may also raise objections to the deal after Thangam Debbonaire, the shadow culture minister, told the Spectator magazine, part of the Telegraph Media Group, that the offer was “ of a foreign power, financed by the deputy prime minister of the United Arab Emirates, and as such. . . it shouldn’t pass.”
Debbonaire’s position is not supported by his party, according to a person familiar with the situation, who highlighted Labour’s desire to retain and attract foreign direct investment.
With Labor holding a strong lead in opinion polls over the Conservatives ahead of a general election due later this year, any change of heart by the main opposition party could be problematic for the deal. A thorough CMA investigation would likely last until after the election.