The government is expected to commit to banning foreign governments from owning British newspapers and magazines – effectively blocking an Abu Dhabi-led takeover of the Daily and Sunday Telegraph.
Sky News understands the commitment will see the government pledge to ban the foreign state ownership, influence or control of newspapers and news magazines in the UK.
The commitment, expected to be set out in the House of Lords this afternoon, will come in an amendment to the third reading of the Digital Markets Act, currently making its way through Parliament.
The move comes as peers prepare to debate an amendment, brought by Baroness Stowell, calling for the banning of foreign state ownership in response to the proposed takeover of the Telegraph titles, as well as the Spectator magazine, by Redbird-IMI.
The US-Abu Dhabi joint venture is 75% owned by Sheikh Mansour, vice president of the United Arab Emirates.
The future of the Telegraph titles has been the subject of fierce debate in Conservative circles since Redbird-IMI circumvented a formal auction by repaying money owed to Lloyds Bank by former owners the Barclay family, who had put the newspapers up as security.
Former Tory leaders Lord Hague and Iain Duncan Smith opposed the takeover arguing that it was inappropriate for significant media assets to be effectively owned by a foreign state.
Scores of MPs have backed that opposition.
Culture secretary Lucy Frazer referred the takeover to Ofcom and the Competition and Markets Authority earlier this year on public interest grounds, effectively freezing the deal and leaving the Telegraph in limbo, the shares formally sitting with the Barclay family.
She is currently considering whether to ask the CMA to carry out a more in-depth “phase two” investigation that could take up to six months.
Redbird-IMI fronted by former CNN executive Jeff Zucker has consistently argued that Sheikh Mansour is investing in a personal capacity and pledged an independent editorial structure to prevent influence over content.
The government will not spell out the details of the legislation at this stage and it remains unclear what level of state investment might be permitted.
While the government’s amendment would block the 75% stake proposed in the Redbird-IMI deal, smaller minority stakes that do not grant control may be permitted.
That may leave the way clear for Redbird-IMI to restructure its deal, with Redbird Capital taking a larger stake or inviting in other investors.
Lord Rothermere, owner of the Daily Mail, and Rupert Murdoch’s News UK, owner of the Times, Sun and Sunday Times, remain interested in a stake in the Telegraph having been outmanoeuvred in the original auction. Another potential investor is Sir Paul Marshall, owner of GB News.
If Redbird-IMI is blocked or cannot restructure the deal they insist they control the shares and retain the right manage the onward sale of the titles. They are likely to face opposition from the Barclay family, who may try and retain control by raising fresh funding.
The proposed legislation may send a mixed message to overseas investors, particularly the UAE, which the Government has enthusiastically courted as a partner in key industries.
The UAE has pumped money into numerous high-profile projects as part of a £10bn five-year investment programme, including wind farms, life sciences, and has been approached about a potential stake in the Sizewell C nuclear power station.
