Foreign governments face ban on owning British newspapers – effectively blocking Abu Dhabi-led Telegraph takeover
The government plans to ban foreign governments from owning British newspapers and magazines – effectively blocking an Abu Dhabi-led takeover of the Daily and Sunday Telegraph.
The commitment was set out in the House of Lords this afternoon in an amendment to the third reading of the Digital Markets Act, currently making its way through Parliament.
Culture minister Lord Parkinson said: “We will amend the media merger regime explicitly to rule out newspaper and periodical news magazine mergers involving ownership, influence or control by foreign states.”
He added: “Under the new measures the secretary of state would be obliged to refer media merger cases to the Competition and Markets Authority (CMA) through a new foreign state intervention notice.”
The secretary of state, the peer said, would be obliged to block deals found to contravene the CMA’s tests.
The move was revealed as the House debated an amendment, brought by Baroness Stowell but withdrawn on confirmation of the government’s plans, that had called for the banning of foreign state ownership in response to the proposed takeover of the Telegraph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 (UAE).
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 CMA 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.
Lucy Frazer, the culture secretary, is currently reviewing reports on the takeover by the CMA and Ofcom
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.
Read more from business:
UK economy returns to growth
TikTok’s US future in doubt
Perkbox founders to celebrate £35m windfalls
Lord Rothermere, owner of the Daily Mail, and Rupert Murdoch’s News UK, owner of the The Times, The 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, a co-owner of GB News.
If Redbird-IMI is blocked or cannot restructure the deal they insist they control the shares and retain the right to 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 and life sciences, and has been approached about a potential stake in the Sizewell C nuclear power station.
Business
Vivergo: How US-UK trade deal could bring about collapse of huge renewable energy plant in Hull
The smell of yeast still hangs in the air at the Vivergo plant in Hull but the machines have fallen quiet.
More than 100 lorries usually pass through here each day, carrying 3,000 tonnes of wheat. It is milled, fermented and distilled. The final product is bioethanol, a renewable fuel that is then blended into E10 petrol.
This is a vast operation. It took several years to build, with considerable investment, but it is on the verge of closing down. Management and staff are holding out for a last-minute reprieve from the government but time is running out.
It’s been a turbulent journey. The plant was already being annihilated by US rivals, losing about £3m a month. Vivergo and Ensus, based in Teesside, blamed regulations that enable US companies to earn double subsidies.
They were pushing for regulatory change but then a killer blow: The US-UK trade deal, which allows 1.4 billion litres of American ethanol into the UK tariff-free (down from 19%).
“We’ve effectively given the whole of the UK market to the US producers,” said Ben Hackett, managing director at Vivergo.
“If we were to have the same support that the US industry has, if we could use genetically modified crops, we wouldn’t need that tariff. We would be able to compete. If we had the same energy costs. We wouldn’t need those tariffs.”
The government has the weekend to come up with a plan that could keep the business running. If it fails, Vivergo will begin issuing redundancy notices to its 160 staff.
Ben Hackett
It’s a devastating prospect for workers, many of them live in Hull and are nervous about alternative opportunities in the area.
Mike Walsh, a logistics manager who has been working at the plant for 14 years, said: “It’s not a great place to be at the moment. It’s a very well paid, very high-skilled role and they’ve (Vivergo) given everybody an opportunity in an area that doesn’t pay that well…. The jobs market isn’t as good as what people would like. So it does impact the local economy.”
He called on the government to “help us, save us, give this industry a future”.
His colleague Claire Wood, lead productions engineer, said: “I moved here after a career in oil and gas for 10 years, partly because I want to be part of the transition to renewable fuels. I can see so much potential here and it’s absolutely devastating to know that this place might be closed very, very shortly and that all that potential just goes away.”
Thousands more could be affected. Haulage companies may have to lay off truck drivers and farmers could also suffer a blow.
Vivergo makes bioethanol using wheat. That wheat is bought from farms from Yorkshire and Lincolnshire.
Claire Wood
The National Farmers Union has sounded the alarm, saying: “Biofuels are extremely important for the crops sector, and their domestic demand of up to two million tonnes can be very important to balance supply and demand and to produce up to one million tonnes of animal feed as a by-product.”
Another bioproduct is carbon dioxide. The gas can be captured and used to put the fizz in drinks or injected into packaging to preserve food.
If Vivergo and Ensus were to go, Britain would lose as much as 80% of its output of carbon dioxide. Supplies are already tight across Europe, meaning this decision could compound shortages across a range of sectors, from meat-packing to healthcare.
The industry is calling on the government to help. Vivergo says it needs temporary financial support but that the government must create a regulatory and commercial environment in which it can thrive.
It says rules that award double subsidies to companies that use waste product in their bioethanol must be changed. At present, these rules are being used by US companies that make ethanol from Uldr – a by-product of processing corn. They argue this is not a genuine waste product.
Read more money news:
Something for everyone in latest economic data
Claire’s falls into administration
Lola’s Cupcakes bakes £30m takeover by Finsbury Food
Another option is to grow the market. Industry leaders are calling on ministers to increase the mandated renewable fuel content in petrol from 10% to 15% and for an expansion into aviation fuels. That would allow British companies to carve out a space.
The government has been locked in talks with the company since June.
It said: “We will continue to take proactive steps to address the long-standing challenges it faces and remain committed to a way forward that protects supply chains, jobs and livelihoods.”
However, the time for talking is almost over.
Mr Hackett said he had no idea how the government would respond but he was firm with his stance, saying: “In times of global uncertainty, losing that energy certainty and supply from the UK is a problem.
“I think what they’re missing out on is the future growth agenda. We’re the foundation on which the green industrial strategy can be built. We make bioethanol that today decarbonises transport. Tomorrow it will decarbonise marine. It will decarbonise aviation.”
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Sports2 years agoButton battles heat exhaustion in NASCAR debut
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike