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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 Telegraph Media Group by Abu Dhabi-backed RedBird IMI.
The British prime minister is exploring the possibility of amending existing legislation, such as the 2002 Enterprise Act, to give the government the power to step in, according to people close to the situation.
Downing Street is facing increasing calls from Conservative MPs to intervene in the £600mn takeover of Telegraph Media Group by Redbird IMI, because of the close links between the newspaper and the Tories.
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 amendment 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 two regulators scrutinising Redbird IMI’s takeover of Telegraph Media Group submitted their initial findings to culture secretary Lucy Frazer 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 to 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 by the CMA rather than face the political firestorm of approving the deal.
The CMA is unlikely to have any reason to impose a block on competition grounds — RedBird IMI does not own any other news groups — but analysts expect 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 football club Manchester City, while RedBird IMI last month agreed to buy a British television production company, All3Media, for more than £1.1bn.
There are also signs the Labour party might raise objections to the Redbird IMI takeover after Thangam Debbonaire, the shadow culture secretary, told the Spectator magazine, which is part of the Telegraph Media Group, that the deal 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 Labour, according to a person close to the situation, who noted the party’s desire to retain and attract foreign direct investment.
With Labour holding a big lead in 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 Redbird IMI deal. An in-depth CMA probe would probably last until after the election.
If the deal becomes unviable due to political opposition, RedBird IMI would be forced to either bring in new money to dilute its ownership of Telegraph Media Group or seek to sell the newspaper.
Some previous bidders for the Telegraph have approached RedBird IMI with offers of investment, according to people familiar with the matter.
DMGT, which owns the Daily Mail, hedge fund millionaire Paul Marshall and Rupert Murdoch’s News Corp all registered interest in an auction before Redbird IMI agreed to buy the Telegraph. DMGT, Marshall and News Corp declined to comment.