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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 mounts from within the ruling Conservative party to block the takeover of the Telegraph Media Group by Abu Dhabi-backed RedBird IMI.
The British prime minister is exploring the possibility of amending existing legislation, such as the Enterprise Act, to give the government the power to step in, according to several people close to the situation.
Downing Street is under increasing pressure from Conservative backbenchers to intervene in the £600mn bid by Redbird IMI for the owner of the Daily Telegraph, given the close links between the newspaper and the ruling party.
The latest move by Number 10 comes after Conservative peer Baroness Tina Stowell, introduced an amendment to the Digital Markets bill, which is currently going through parliament, to give the government powers to veto a foreign state buying a British news organisation.
The measure will be voted on in the House of Lords on Wednesday and if passed, the bill would then go back to the Commons, where it already has the backing of more than 100 MPs.
The government is in talks with Stowell about dropping her amendment if it comes up with an alternative proposal in time. Downing Street and Stowell declined to comment.
The possible intervention by Sunak comes as the two regulators scrutinising the deal for the Telegraph submitted their initial findings to culture secretary Lucy Frazer about the proposed takeover on Monday.
The recommendations by 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 in-depth scrutiny — a probe that could take months.
Many MPs and media analysts expect Frazer to request a second phase inquiry rather than face the political firestorm 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 that the Ofcom report will reflect some of the concerns raised over ownership and independence.
In a statement, Ofcom said that the “publication of our advice and any decision on how to proceed are matters for the secretary of state”.
The deal is awkward for Downing Street given the government has endorsed Abu Dhabi funds flowing into the British economy via deals struck over key assets in the life sciences sector.
RedBird IMI is run by former CNN boss Jeff Zucker in New York but has the majority of its funding from Abu Dhabi. IMI, the Abu Dhabi vehicle behind RedBird’s joint venture, is controlled by Sheikh Mansour bin Zayed Al Nahyan, a vice-president of the UAE.
Sheikh Mansour owns Premier League soccer club Manchester City, while RedBird IMI last month agreed to buy a British TV production company, All3Media, for more than £1.1bn.
There were also signs that the opposition Labour party might also raise objections to the deal after Thangam Debbonaire, the shadow culture secretary, told the Spectator magazine, which is part of the Telegraph Media Group, that the bid was “by a foreign power, funded by the deputy prime minister of the UAE, and as such . . . should not pass”.
Debbonaire’s position is not endorsed by her party, according to a person close to the situation, who noted Labour’s desire to retain and attract foreign direct investment.
With Labour holding a strong lead in the opinion polls over the Conservatives ahead of the general election expected later this year any change of view by the main opposition party could be problematic for the deal. An in-depth CMA probe would probably last until after the election.
