Potential Joint Takeover Bid for The Telegraph by News Corp., Daily Mail, and RedBird IMI

The Telegraph’s fate has been hanging in the balance for quite some time now. With three bidders vying for a joint bid, it seems probable that an understanding can be reached.

The Telegraph, one of the UK’s most renowned newspapers is the center of discussion regarding a potential joint takeover bid by News Corp., owned by Rupert Murdoch, and the parent company of the Daily Mail. These discussions also include RedBird IMI, an investment fund backed by the UAE.

Sources familiar with the matter revealed that a joint bid such as this would likely result in a reduced stake for RedBird IMI, alleviating concerns among British policymakers regarding foreign state influence over a prominent media outlet. Representatives from the Daily Mail and General Trust (DMGT) and News Corp.’s News UK unit have held confidential discussions to explore the formation of such a joint structure.

The ownership status of The Telegraph has remained unclear for several years. RedBird IMI, a collaboration between a New York investment firm and a UAE-backed media investment entity, had previously agreed to extend loans of approximately £600 million ($750 million) to assume control of The Telegraph from the Barclay family. However, concerns raised by UK lawmakers about foreign ownership, along with ongoing regulatory investigations, have created hurdles in the completion of the deal, allowing rival bidders to remain active.

Both DMGT and News UK declined to comment on the matter, as did RedBird IMI, emphasising that it is not currently involved in discussions regarding the joint bid.

RedBird IMI, led by former CNN chief Jeff Zucker, despite being approached by various parties interested in collaboration, remains primarily focused on acquiring The Telegraph outright. Paul Marshall, hedge fund manager and co-founder of Marshall Wace, also a potential bidder, might be excluded from the joint bid.

The discussions came about during the scrutiny of RedBird IMI’s proposed takeover by lawmakers within the UK’s Conservative Party, particularly concerning the majority ownership by Sheikh Mansour, the deputy prime minister of the UAE.

The UK government, led by Prime Minister Rishi Sunak, is expected to consider potential amendments to legalisation aimed at restricting foreign state involvement in the British Media industry. The Competition and Markets Authority and communications regulator Ofcom are slated to submit the findings of their investigations into the RedBird IMI deal to Culture Secretary Lucy Frazer.

In response to concerns about UAE involvement, a joint bid involving News Corp. and DMGT could ease the anxiety about foreign influence. However, it might introduce new considerations regarding media plurality and competition, given the significant interests held by Harmsworth and Murdoch in UK news titles.

Preliminary discussions have explored the possibility of RedBird IMI holding a stake as low as 25% in the Telegraph to deal with concerns about foreign state interference. However, it is still unclear whether the parties will reach an agreement on a joint structure. DMGT and News UK have previously proposed a joint venture to consolidate their printing operations.

Meanwhile, in the political sphere, Labour leader Keir Starmer has expressed reservations about foreign state ownership of British news outlets. Nevertheless, at this stage, he is not actively opposing the RedBird IMI bid, according to sources familiar with his perspective. This stance contradicts earlier statements by Shadow Culture Secretary Thangam Debbonaire regarding the Labour Party’s intentions to oppose the takeover.

The Telegraph’s fate has been hanging in the balance for quite some time now. With three bidders vying for a joint bid, it seems probable that an understanding can be reached. This joint bid would be interesting, especially with the competing interests of the three bidders as well as the ongoing regulatory scrutiny.