UK’s communications regulator Ofcom has until 26 January 2024 to finalise its report on the takeover bid of The Telegraph by a vehicle backed by a member of a UAE ruling family. Ofcom’s probe was triggered by a Public Interest Intervention Notice (PIIN) issued by Culture Secretary Lucy Frazer.

Ofcom has previously been asked to consider an acquisition of a stake in influential UK publications by a buyer linked to a Middle Eastern country. On 27 June 2019, the then Secretary of State issued a PIIN in relation to the acquisition of a 30% stake in Evening Standard and Independent by a Saudi investor, Sultan Mohamed Abuljadayel. On 21 August 2019, Ofcom said it could find no evidence of any meddling in the papers following the investment from Abuljadayel. (https://assets.publishing.service.gov.uk/ ) 

The ruling could serve as a precedent. However, Ofcom’s report into Saudi investor deals does not favor the Emirati-backed takeover of the Telegraph. Quite the contrary.

The Evening Standard / Independent precedent

Between 2017 and 2019, companies controlled by Saudi investor Sultan Mohamed Abuljadayel purchased a 30 percent stake in  Evening Standard and Independent from Evgeny Lebedev through a series of transactions. On 27 June 2019, the then Culture Secretary Jeremy Wright issued a Public Interest Intervention Notice (“PIIN”) concerning the acquisition of shares in the Evening Standard and Independent by an investor with “strong links” to the Saudi state.

The Secretary of State asked Ofcom to look at the effect of the transactions on the following public interest considerations: “the need for accurate presentation of news in newspapers” and “the need for free expression of opinion in newspapers.” Secretary Frazer’s PIIN relating to The Telegraph was issued on exactly the same grounds.

Ofcom ruled in favor of the merger, but the main arguments referred to the editors’ corporate structures and buyers’ past behaviour. The transactions had not given the Saudi investor majority control, and his past behaviour indicated he was unlikely to influence the content of the publications in the future.

The majority control

Abuljadayel-Lrebedev transactions for stakes in the Evening Standard and Independent, Ofcom said, had not given the Saudi investor majority control. The corporate structures of the editors of the publications included other strong shareholders. According to Ofcom, Abuljadayel “might have some incentives and ability to influence the publications.” However, this ability was “qualified by the presence of the other shareholders.” The transaction had given the Saudi investor only a 30% share in the publications. That was “not on its face sufficient to confer control over editorial matters in The Independent news websites, since the other shareholders form a majority.”

That is not the case with the expected deal between Sheikh Mansour and the Barclay family (who own the Telegraph). RedBird IMI is in line to take control of the Telegraph and Spectator. Redbird IMI is a joint venture between US private equity firm Redbird and International Media Investments (IMI). IMI, an Abu Dhabi entity owned by Sheikh Mansour, is the vehicle’s majority partner. Redbird IMI started with $1 billion in committed funds. RedBird committed $250 million to the venture, IMI committed the remaining $750 million.

In its Evening Standard / Independent deals report, Ofcom clearly stated that “if the shareholders sought to increase their holding, a shift from partial control to majority control would trigger UK merger control provisions once more.”

The past behavior

According to Secretary of State’s statutory guidance, “the impact of a relevant merger situation on accurate presentation of the news is likely to be assessed by reference to evidence of past behaviour by the enterprises in question, or by the persons with control of such enterprises.”

In assessing the accurate presentation of news ground in relation to the Evening Standard and Independent in August 2009, Ofcom considered whether the Saudi investor had shares in other media businesses, which could provide evidence of his likely behavior. Ofcom assessed that the past behaviour is “good evidence that the buyers are unlikely to influence the content of the publications in future.”

Unlike Abuljadayel’s vehicle, Sheikh Mansour’s IMI is, as its name (International Media Investments) implies, a media investment company. IMI and its parent company, ADMIC (Abu Dhabi Media Investment Corporation), have a history of censorship and biased reporting. All IMI’s media outlets, including its English-language newspaper, The National, and its joint venture with UK-based Sky Group, Sky News Arabia, have been under scrutiny for self-censorship, editorial interference, and government control. Al Roeya, a newspaper published by IMI, fired almost all its journalists and editors because it had reported on how Emiratis were reacting to the rising price of energy.