Telegraph marks a year in limbo as Starmer faces diplomatic pressure over sale

Long-running saga risks raising uncomfortable questions for the Prime Minister as he travels to the UAE

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When Lucy Frazer, the former culture secretary, intervened to halt the sale of The Telegraph to a fund backed by Abu Dhabi, it was clear the Gulf state’s swoop on the British media would not go smoothly.
Few could have predicted, however, that a full year later RedBird IMI would be left clutching a newspaper it was legally blocked from controlling.
For staff at The Telegraph it has been a year of limbo, with executives blocked from making strategic decisions even as the media landscape shifts rapidly underfoot.
Alice Enders, a media analyst, describes the newspaper as “like a drifting ghost ship in Pirates of the Caribbean”.
“It’s very detrimental to people who work there – being a journalist is a very tough profession – and to be stuck in this sort of limbo for more than a year already is not good for the organisation in terms of its cohesion and direction of travel,” she says.
Frazer’s first intervention was to issue a Public Interest Intervention Notice (PIIN) last November, triggering a regulatory investigation into a complex deal that would see RedBird IMI repay £1.2bn in debt owed to Lloyds Banking Group by previous owners the Barclay family. Roughly half this sum would in turn convert into ownership of The Telegraph and the Spectator magazine.
Following months of scrutiny – and cross-party opposition from MPs – the deal was scuppered in March with the introduction of new laws banning foreign state control of British newspapers.
As the diplomatic fallout spread, RedBird IMI put both The Telegraph and Spectator back on the block. Sir Paul Marshall, the hedge fund billionaire behind GB News, acquired the world’s oldest weekly magazine for £100m – an eye-watering price tag that exceeded even RedBird IMI’s best hopes.
A sale of The Telegraph still has not been finalised, however. Dovid Efune, the little-known publishing entrepreneur behind online outlet The New York Sun, tabled the leading bid and is currently locked in exclusive discussions.
But several potential backers have left talks to bankroll Mr Efune’s bid, raising questions over whether he can assemble the £500m-plus required to buy the newspaper. So with just a week left until talks expire at the end of the month, uncertainty is mounting over whether RedBird IMI will be able to recover its costs.
The troubles have fuelled speculation that RedBird IMI, which is majority-owned by UAE vice president Sheikh Mansour, has been over-optimistic in its hopes for the sale.
Lord Saatchi, who was knocked out of the auction in August when his £350m bid was rejected, said he was “sorry RedBird IMI overpaid”. Marshall is understood to have baulked at the lofty valuation and opted to go into battle with Rupert Murdoch for the smaller and nominally cheaper Spectator instead.
Among senior London investment bankers the saga has become the stuff of comic cocktail chatter. It is said in polite society that the founders of RedBird IMI’s original deal adviser Robey Warshaw – Sir Simon Robey and Simon Warshaw – now claim ignorance of the debacle, directing questions at their junior partner, the novice investment banker and podcaster George Osborne.
Tales are also told of a weekly call between Osborne, RedBird IMI chief Rani Raad and Raine, the adviser appointed to sell The Telegraph on. Sultan Al Jaber, the senior Emirati behind the original deal with the Barclay family, occasionally interjects with demands to the effect of “get my damn money back”, bankers claim.
RedBird IMI has some tools at its disposal to push through a deal, including providing a vendor loan to Mr Efune to help him reach the necessary funding. However, sources close to the fund have denied it will opt for this route.
There is also the prospect that all or some of the funding that came from US-based RedBird Capital – around £128m – could be rolled over into the new deal.
Should Mr Efune not be able to find the funding, or if RedBird IMI is unwilling to slash the price tag to accommodate him, it raises the prospect of a fresh auction.
Yet even a year after the PIIN was triggered, legal and regulatory questions remain. While the previous government pushed through new laws on foreign ownership of newspapers, secondary legislation outlining exceptions to the rules has still not been passed.
Ms Frazer had said she was considering imposing a 5pc cap on foreign state investment, but this threshold has not yet been set.
Rival media groups including Rupert Murdoch’s News UK and DMGT, the Daily Mail publisher owned by Lord Rothermere, have lobbied for this cap to be raised, warning of “unintended consequences” that would stymie investment in the British media industry.
In response, ministers proposed to increase the cap to 10pc for diversified businesses whose UK newspaper holdings account for 20pc or less of their global turnover.
Yet industry insiders point out that the UK’s rules on newspaper ownership are now more stringent than national security laws that govern highly sensitive industries such as energy, defence and telecoms.
Responsibility now lies with Lisa Nandy, the new Culture Secretary, to finalise the rules. Ministers are understood to be working on the legislation, with a decision expected in the coming months.
But industry observers question whether this lack of clarity has put off prospective bidders. Sovereign wealth funds in countries like Norway, for example, could be cleared to bid if a suitable threshold were set.
“The public interest regime remains a huge hurdle and no one would be stupid enough to close without that clearance, which will allow RedBird IMI to finally be shot of the asset it still in principle owns,” says Enders.
Meanwhile, The Telegraph remains in stasis. Under the terms of the PIIN, the independent directors overseeing the newspaper are barred from making any management changes without the Culture Secretary’s consent.
The Telegraph remains a profitable business, with operating profits of £54.2m in 2023, up more than a third on the previous year.
Those profits, however, are not being invested in the future of journalism. The Telegraph’s parent structure, starting with Press Acquisitions Limited, is paying tens of millions of pounds of fees to advisers and on liabilities including a £60m loan from Lloyds Banking Group.
A source close to RedBird IMI insisted that all profits remained within the business and were overseen by the independent directors, in line with the requirements of the PIIN.
Nevertheless, uncertainty over future ownership has left executives with little scope to set out a long-term strategy and make investments in journalism.
While the UAE’s swoop on The Telegraph proved a headache for the previous Conservative government, it could now be up to Labour to determine the ultimate conclusion.
Sir Keir Starmer will travel to the UAE and Saudi Arabia next month in a bid to drum up foreign investment for nuclear power and other infrastructure that might boost Britain’s weak growth.
Yet Sheikh Mansour is still likely to be reeling from his attempt to invest in the UK media sector. Enders says the process “sorely tested his dignity”.
The lengthy delays to secondary legislation on foreign ownership have fuelled speculation that the Prime Minister could open the door to soften the rules, allowing some money linked to RedBird IMI to remain in the deal.
So as he embarks on his trip to the Gulf next month, Sir Keir may face uncomfortable questions about how he plans to bring this long-running saga to its end.
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