Telegraph Takeover

Article by Solomon Mayers

This article explores the circumstances and broader issues surrounding the sale of key UK media titles, The Telegraph and The Spectator, to US and UAE enterprises.

Background to the Sale

The complex financial and corporate structure of UK media entities has been exposed by recent transactional dealings surrounding the sale of one of the largest broadsheet titles in UK media markets. The Telegraph Media Group Ltd (TMG) operates a multimedia company with key titles, including ‘The Daily Telegraph’ and ‘The Sunday Telegraph’, alongside ‘The Spectator’ as a sister magazine. These assets are contained in the Bermuda-based holdings firm, B.UK, in which the Barclay family holds shares and ultimately controls. The sale of these media titles comes against the backdrop of over £1 billion of outstanding debt that the Barclay family owed to the Bank of Scotland, a subsidiary of the Lloyd’s Banking Group. Following unsuccessful attempts at a resolution between these parties, the banking group placed B.UK under the receivership of AlixPartners. Generally, a receiver is appointed by the creditor to receive the assets of an indebted company in an attempt to recoup these debts – the receiver may liquidate these assets, sell the business wholly, or allow the business to continue to trade, but is ultimately motivated by the need to achieve the best results for the creditor. Thus, AlixPartners has explored ways to recover the debts of Lloyds, and making good on prior indications that this would include the sale of key news assets, initiated the auction process of the TMG and The Spectator in late 2023.

Who is Buying

Previous valuations of these titles were estimated between £500m-£700m, and commentators therefore speculated that it would be unlikely that Lloyds would regain the full sum of their debts from this sale. These expectations were subverted when the Barclay family bid for £1.1 billion, following a loan agreement with US and UAE joint-investment firm RedBird IMI. Under this agreement, RedBird IMI will lend to the Barclay family a loan package of £600m, secured against the TMG and The Spectator, among other key assets, to bring them out of the receivership and fully repay their debt to Lloyds, with the intention of quickly converting this loan into equity to affect a transfer of ownership and operational control of these titles to RedBird. In December 2023, Lloyds received payment of this sum in satisfaction of the Barclay family’s long-held debt.

Key Issues Raised

The takeover of these newspaper assets has been subject to significant criticism. Political and media commentators have raised concerns about the involvement of foreign involvement in UK media affairs that this deal would enable and how this may influence its reporting of key issues. These concerns are compounded by the looming general election for which fair and accurate reporting, separate from the influence of overseas interests, is critical.

RedBird has undertaken some efforts to demonstrate structural independence by registering the holdings company of the TMG in the UK and making representations that it would preserve the newspaper’s credibility and independence through a binding editorial charter. However, the Culture Secretary nonetheless issued a ‘Public Interest Intervention Notice under sections 48 and 58 of the Enterprises Act 2002 against this deal in January 2024, citing concerns about the accurate presentation of the news and free expression of opinion. This notice effectively triggers an investigation by the Competition and Markets Authority and Ofcom into the merger, and both bodies are bound to report back on their findings before the 11th of March 2024. Therefore, it is paramount to the success of this transaction that these bodies conclude the takeover of the TMG would not negatively impact its freedom of expression and accuracy. While these regulatory investigations are ongoing, any concrete decisions by the government to approve the deal or obstruct it on competition and public interest grounds are pending. Thus, the ownership prospects for the TMG remain unclear for the time being.