Foreign interest in British paper raises flags

Senior U.K. ministers including Business Secretary Kemi Badenoch and Security Minister Tom Tugendhat, who both attend Prime Minister Rishi Sunak's Cabinet, have raised concerns within government about the possibility of foreign ownership of the Telegraph, according to people familiar with the matter.

Badenoch and Tugendhat have flagged the issue with Secretary of State for Culture, Media and Sport Lucy Frazer, the people said, as pressure mounts from backbench lawmakers for the government to intervene in the process.

Frazer's office declined to comment.

It comes as a court hearing today to liquidate a Barclay family holding firm is set to be adjourned, which could offer the clan a route to pay their debt to Lloyds Banking Group Plc and reclaim control of the newspaper. The family's offer to repay over $1.25 billion of debt to Lloyds is backed by RedBird IMI which would lend money to the Barclay family to enable them to repay the debt it owes.

The media investment vehicle is led by former CNN president Jeff Zucker and is a joint venture between RedBird Capital Partners and the United Arab Emirates-based International Media Investments.

Conservative members of Parliament Neil O'Brien and Danny Kruger have both urged Frazer to issue a so-called public interest intervention notice in recent weeks. A PIIN can trigger regulators Ofcom and the Competition and Markets Authority to report to the British government on media public interest considerations, jurisdiction and competition issues.

O'Brien, who until last week was a government minister, said Friday on the social media platform X, formerly Twitter, that he hopes Frazer's department will "scrutinise the financing and ownership structure of any deal closely and put them through the usual PIIN process." Kruger also urged Frazer to use a PIIN to scrutinize the prospect of "foreign investment into influential British media" through a letter he sent to the minister last month, reviewed by Bloomberg.

A spokesperson for the Barclay family, referring to an earlier statement on the process, said the family's proposal to Lloyds concerns the settlement of outstanding loans.

"There is no precedent and no basis for a PIIN being issued in relation to a debt transaction, and we are highly confident that the family's proposal would not trigger any regulatory reviews regarding the ownership of the media assets," the statement said. "We continue to believe that our proposal offers Lloyds Banking Group and its shareholders the most compelling, straightforward and speedy resolution to this situation."

Lloyds seized the Telegraph titles along with the Spectator magazine from the Barclay family in June to claw back debts, removing Barclay family members from their director positions and placing the businesses in receivership. Goldman Sachs Group Inc. has been appointed to run the sales process for the Telegraph Media Group Ltd. and the Spectator (1828) Ltd.

"If material influence over, or control of, a quality national newspaper was passed to an unknown foreign ruler at any time it would raise concerns, but at a heightened time of geopolitical turmoil I believe it is more important than ever that this deal for a treasured national asset is given proper scrutiny," Kruger said.