UK Set to Ban Foreign Control of Media Firms Amid Telegraph Bid

Under the proposal, regulators would be obliged to probe whether a takeover involved foreign states acquiring a controlling stake in British media companies. If they found that was the case, the Culture Secretary would then be required to issue an order blocking or unwinding the deal, one person said.

Read more: News Corp. Said to Mull Bid for Telegraph Owner With Rivals (3)

The potential for a foreign government to gain control over the nearly 170-year-old Telegraph newspaper and the Spectator magazine — via UAE Deputy Prime Minister Sheikh Mansour’s majority holding in investment vehicle RedBird IMI — has caused an uproar in Westminster. The titles have historically been seen as supportive of the governing Conservative Party.

The Telegraph Media Group and RedBird declined to comment.

The legislative changes now being proposed through the Digital Markets, Competition and Consumers Bill could scupper the RedBird deal in its current form, one person said.

Currently, takeovers can be blocked by the Secretary of State if they raise concerns around competition, media plurality or national security. On Monday, Culture Secretary Lucy Frazer was handed reports from the Competition and Markets Authority and media regulator Ofcom, after she referred the RedBird deal for an initial investigation.

She is expected to make a decision on whether to refer the deal for an in-depth investigation next week.

The government’s proposal comes in response to move by Conservative peer Tina Stowell to try to change the bill to ban a “foreign power” from acquiring a media or news organization “in any form.” The government will hope its counter-proposal will persuade her to back down.

The proposed ban on foreign control is expected to be put to a vote in the upper House of Lords later this month. It would have to be passed there and in the lower House of Commons and get Royal Assent before the new rules would come into force.

Bloomberg previously reported RedBird has already held discussions with Rupert Murdoch’s News Corp. and Daily Mail publisher Daily Mail & General Trust Plc on constructing a separate bid which would reduce its ownership stake in the Telegraph. It was unclear how the UK government’s plan would affect that.