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UK culture secretary Lucy Frazer has demanded fortnightly updates on the sale of the Telegraph newspaper to encourage a speedy resolution to a saga that she describes as the one of the most “intense” periods of her ministerial career.
In an interview with the Financial Times, Frazer defended the decision to block the sale of the media group to an Abu Dhabi-backed company but insisted it was not a signal the government was turning its back on investment from the region.
“It’s really important to make clear that we are open for business,” said Frazer, who will travel to Saudi Arabia this month to drum up business for the UK cultural sector. She said letting the Gulf kingdom invest in British culture was “totally different” to allowing foreign states to own UK newspapers.
“This is a fundamental principle about freedom of our newspapers,” said Frazer, adding that she had asked for biweekly updates on the sale of the Telegraph Media Group from RedBird IMI. “It’s really important we don’t impinge on democracy. In every other area — football [for example] — we’re not stopping foreign investment.”
Frazer, culture secretary since last year, led efforts in government to first scrutinise and then change the law to block the takeover of the Telegraph Media Group by RedBird IMI, by barring overseas states from taking large stakes in UK newspaper group.
The deal for the Daily Telegraph, Sunday Telegraph and Spectator titles became a political flashpoint, with MPs and peers voicing concerns over a foreign power exerting influence over a UK media group with strong links to the Conservative party.
This week RedBird IMI — a joint venture between US private equity firm RedBird and Abu Dhabi-based International Media Investments — said it would withdraw its offer and launch an auction in a bid to recoup the £600mn it paid for the broadsheet titles and the Spectator magazine.
“I was very conscious at every stage that the future of the Telegraph was potentially in my hands,” she said, adding that the sale of the newspaper by Lloyds Banking Group jump-started a frantic effort in Whitehall to ensure it did not fall under the influence of a foreign power.
“We worked as a department for about three weeks, nonstop over weekends, up till the early hours,” Frazer said. “It’s impossible for others to understand the intensity . . . the sense of importance of the decisions that we’re taking.”
RedBird IMI, which derives about three-quarters of its funding from Abu Dhabi but is managed by US executives, promised to maintain editorial independence of the Telegraph.
But Frazer said the deal raised a “matter of principle” over foreign state ownership of newspapers. “A foreign state is likely to buy a newspaper, not as a commercial entity, but to ensure that it gets very full coverage in a particular country. It’s a pillar of democracy that you should be able to report without fear or favour,” she said.
RedBird IMI chief Jeff Zucker branded rivals for the titles hypocrites for attacking his bid, citing previous attempts by them to court RedBird IMI as part of bids for Telegraph Media Group. People close to the group also said the press in the UK is often heavily influenced by wealthy owners.
MPs and media executives are now concerned that there will be months more uncertainty over the ownership of the Telegraph in the run-up to the general election expected this year.
Frazer said she wanted an onward sale “as soon as possible”. Responsibility for the sale rests with RedBird IMI, which needs to sell the debt behind the group with the option of converting into ownership.
“There’s a huge amount of uncertainty for the Telegraph at the moment and has been for some time. If there is a significant matter that arises between those 14 days, I would like to be updated on it,” she added.
Frazer confirmed that the government would seek to cap any ownership by a foreign state of a newspaper group at 5 per cent, but added that she would consult on the plans first to ensure the new law had no “unintended consequences”, although this would not include the 5 per cent limit.
Some media owners are concerned that the cap will make it impossible to finance future deals, or risk hitting passive sovereign wealth fund shareholders that already have stakes in listed UK and US companies.
But Frazer said 5 per cent seemed the right level to ensure no undue influence over a newspaper group, adding: “We don’t want to restrict all investment. What we are stopping is investing in a newspaper for the purpose of influencing the editorial.”
Frazer said the law would not be imposed retrospectively, which means it could not be used to review previous deals, such as a sale of large stakes in the Evening Standard and the Independent to a Saudi businessman.
Frazer will have a chance later this month to demonstrate that her handling of the Abu Dhabi-backed bid for the Telegraph does not signal a move towards a more inward-looking approach to foreign investment.
For two days from May 14 she will be among ministers leading a cultural and business delegation, expected to include representatives of bodies such as the Royal Opera House and Science Museum, to Riyadh seeking Saudi investment.
“I think there will be lots of discussions about how the Saudis can learn from the UK and there will be discussions about investment by the Saudis into UK companies,” Frazer said.
She said engagement with Saudi Arabia “brings benefits to them, exports our soft power abroad and brings investment into the country”.
Frazer acknowledged that London was engaged in a battle for Saudi investment with Paris, noting: “The French have spent a lot of time exporting their culture abroad.”
Asked if she would advise her hosts in Riyadh that they would be better off putting their money into British cultural institutions, Frazer said: “Of course. Our culture is the best in the world and we don’t want the French stealing a march on us.”
