When former CNN chief Jeff Zucker stepped in last November with a bold Abu Dhabi-backed bid to take control of the UK’s Telegraph and Spectator, he seemed confident he would emerge victorious.
But Zucker underestimated the fierce resistance he would face if he clashed with Britain’s conservative establishment – and his favorite media titles – as they fought to frustrate his RedBird IMI investment group.
On Wednesday, after months of fierce lobbying and last-minute parliamentary haggling, Prime Minister Rishi Sunak unveiled plans to change the law to prevent foreign states from buying British news organisations.
The news will delight some executives at the Telegraph and Spectator and could give the embattled Sunak favorable coverage to boost the Tories’ abysmal polls. “We need all the help we can get,” admitted a former Conservative minister.
The publications, fiercely opposed to the idea of foreign state ownership, led the resistance to RedBird IMI’s £600m takeover of Telegraph Media Group, helping to orchestrate a Tory campaign to change the law to block it.
Kemi Badenoch, the business and trade secretary, who worked as a “digital director” at the Spectator almost 20 years ago, played a major role in blocking the bid, people close to the government’s discussions said.
For Badenoch, who hopes to succeed Sunak as Conservative leader, the Telegraph and the Spectator are media players with a direct line to party members who have the final say in leadership contests. “He was working behind the scenes, pushing for action,” one of the people said.
The ever-optimistic Zucker had some reason for confidence last November when he set out plans to convince regulators to buy RedBird IMI with the promise of an independent editorial board at the Telegraph and investment.
He was responding to how culture secretary Lucy Frazer had commissioned investigations by media watchdog Ofcom and the Competition and Markets Authority, the antitrust regulator.
Influential Conservatives such as former chancellor Nadhim Zahawi supported RedBird IMI’s bid, while another former chancellor, George Osborne, and Ed Richards, the former head of Ofcom, were enlisted as advisers.
Furthermore, Abu Dhabi, which provides around three-quarters of the money behind RedBird IMI, is a British ally in the Middle East and a source of inward investment. UK ministers are regular visitors looking for business opportunities, including in Badenoch itself this month.
But in recent months, the Telegraph and the Spectator have launched a fierce lobbying campaign against the bid, arguing that Abu Dhabi’s ownership could threaten editorial independence and free speech.
By this week nearly 150 MPs from all parties, but mostly Conservatives, had backed the proposal to give Parliament a veto over the takeover, calling foreign state ownership of a news group a “dangerous Rubicon” that should not be crossed.
Robert Jenrick, a former government minister, led the opposition in the House of Commons, with Sir Iain Duncan Smith, a former Tory leader, adding his voice to those who argue it would be “bizarre” to have “one of the reference in the United Kingdom ends up under the control of someone in the Middle East.”
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 who also owns Manchester City Football Club.
But Sunak, until this month, appeared content with RedBird IMI’s bid proceeding through lengthy regulatory scrutiny, potentially postponing any final takeover decision until after this year’s general election. He had given no indication that he might legislate to block it.
Whatever the problems with Zucker’s bid, other potential buyers of the Telegraph – traditionally considered the Tory party’s house paper – also came with strings attached, as far as the Conservative leadership was concerned.
Rupert Murdoch’s News UK and Lord Rothermere’s DMGT, two other large news groups, may have faced significant competition problems. Paul Marshall, the hedge fund millionaire, already co-owns GB News, which provides a platform for the populist Reform UK party, a serious threat to the Conservatives.
The problem that opponents of the takeover posed was how to force the prime minister’s hand?
The decisive moment came when Baroness Tina Stowell, former Tory leader in the House of Lords, tabled an amendment to a bill before the Second Chamber aimed at stopping Zucker’s candidacy.
The February 26 amendment to the Digital Markets Bill aimed to give parliament the right to veto bids by foreign states to buy British media assets.
“Nobody in the government knew anything about it until it was established,” he told the Financial Times. Jenrick and his allies jumped at the idea and immediately pledged their support.
Crucially, the opposition Labor Party this month also said it would accept the proposal. “We do not support ownership of the media by foreign governments,” a spokesman for Labor leader Sir Keir Starmer said.
With Stowell intending to put her amendment to a vote on Wednesday and fully expecting victory, Sunak was backed into a corner. “It was checkmate: the prime minister’s hand was forced,” said a former minister involved in the campaign to stop RedBird IMI.
If Stowell’s amendment had passed, Sunak might have tried to overturn it in the House of Commons. But with Labor and more than 100 Conservative MPs signaling their opposition to foreign state ownership of the Telegraph, such a move would have been futile.
Instead, Sunak ordered a deal with Stowell. Cultural department officials “began moving a thousand miles an hour” to reach an agreement with her, a person familiar with the matter said. Ministers held meetings with Conservative colleagues last week, which finally materialized on Wednesday.
Under the agreement, Stowell would withdraw his amendment in favor of a government amendment that would achieve his goal and satisfy the scores of Conservative MPs aligned against Zucker’s candidacy.
Lord Stephen Parkinson, culture minister, announced in the House of Lords at around 5pm on Wednesday that the measure “explicitly amends the media merger regime to exclude newspaper and periodical magazine mergers involving ownership, influence or control by foreign states ”.
It was a painful episode for those involved in Zucker’s bid. The tone of the debate at Westminster in recent weeks has alarmed some in the RedBird IMI camp over comments they saw as bordering on xenophobic against a trading partner in the Middle East.
One said the deal appeared to be the victim of a weak prime minister, unable to cope with rumors of his backbeck and chaos within his party.
A spokesperson for RedBird IMI said it was “extremely disappointed” by the government’s decision and would “assess our next steps”.
The joint venture “has been clear that the acquisition of the Telegraph and Spectator was a completely commercial venture. We remain committed to developing powerful and commercially viable global media assets,” the spokesperson added.
Sir Robert Buckland, a former Conservative justice minister, was relieved that the matter had come to a head. “This is an extremely sensitive issue, but it is inappropriate for foreign governments to own British newspapers,” he said.
Spectator editor Fraser Nelson celebrated Sunak’s speech and said “the free press – vital to our democracy – was today protected by parliament”.
But for many in the Telegraph newsroom, the developments have meant further uncertainty about their jobs. Another months-long sales process awaits us.