Dubai, UAE–The UK government has ordered a formal probe into the proposed sale of the Telegraph Media Group to an Abu Dhabi-backed investment fund.
The investment fund, RedBird IMI, disclosed earlier this month that it was set to take control of The Daily and Sunday Telegraph sister newspapers and The Spectator magazine.
The joint venture between US firm RedBird Capital and Abu Dhabi’s International Media Investments said it had agreed loans of around £1.2 billion ($1.5 billion) to take control of the parent company of the right-leaning titles.
UK Culture Secretary Lucy Frazer said her department had now written to the Barclay family which owns the TMG, and RedBird IMI to inform them that she was issuing a Public Interest Intervention Notice (PIIN) in relation to the deal.
“This relates to concerns I have that there may be public interest considerations… that are relevant to the anticipated acquisition of TMG by RedBird IMI and that these concerns warrant further investigation,” Frazer said.
The decision triggers a requirement for the Competition and Markets Authority regulator to report back to Frazer on “jurisdictional and competition matters” in the deal.
Media regulator Ofcom has been asked to report back to her on “the need for accurate presentation of news and free expression of opinion in newspapers”.
Both have been given until January 26 to respond.
The Telegraph group has been controlled by twin brothers Frederick and David Barclay for nearly two decades but has been put up for sale over unpaid debts.
Lender Bank of Scotland announced in June that it had appointed a receiver for its Bermuda-based holding company, due to “debts being in default and with no sign they would be repaid”.
RedBird IMI had said a $762-million “package of loans” will fully repay the debts owed, allowing the media group to be taken out of receivership.
The tie-up also intends to exercise an option to convert a further “similar” sized loan — secured against the Telegraph and Spectator titles — into equity.
Redbird IMI, which said it will “co-operate fully with the government and regulator”, is run by former CNN president Jeff Zucker.
It has said RedBird Capital will “alone” run the titles, but under Zucker’s “leadership”, while IMI will be “a passive investor only”.
But the plans have sparked concern among some lawmakers in the ruling Conservative party, which has long enjoyed a close ideological relationship with the Telegraph titles.