Lisa Nandy, the culture secretary, is poised to refer the proposed sale of the Telegraph to regulators, taking the deal out of the hands of politicians in Westminster and the paper’s senior editors.
US private equity firm RedBird Capital has lined up £150m in debt to fund a deal for the newspaper that has been mired in argument that has spilled into the pages of the paper.
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Charles Moore, a former Telegraph editor, wrote an op-ed for the paper arguing RedBird had “overpaid”; that the paper was at risk from foreign interference due to the RedBird chair’s alleged links to Beijing; and that the involvement of Daily Mail owner Lord Rothermere’s DMGT – which has taken a 10% stake for £35m – might raise competition and media plurality concerns with regulators.
Moore’s article has been followed by several others in the Telegraph, including one referring to RedBird’s chair, John Thornton, as a “communist party groupie” in the headline, and another that alleged RedBird had not notified AC Milan about a new investor in the football club it owns.
“A senior Telegraph source said they objected to RedBird’s business plan.”
“The Telegraph is now effectively campaigning against RedBird, hence all these articles saying that the government should investigate,” says a media veteran. “It’s fun and games. But I suspect [the Telegraph] could reach its third birthday in receivership before any resolution is reached.”
RedBird’s founder, Gerry Cardinale, hit back in another op-ed, saying the firm’s funds “do not include any institutions or individuals from the UAE or from China”. Thornton was previously on the board of News Corp, the owner of the Times newspaper, and is now chairman of RedBird.
“John Thornton is undoubtedly somebody who has said very polite things about the Beijing regime,” said a source familiar with both sides. “But he’s had nothing to do with this deal. He would have no influence over the operations of the Telegraph.”
Thornton’s role seems unlikely to be enough to scupper RedBird’s bid. More pertinent, perhaps, is whether the Competition and Markets Authority will intervene over Rothermere’s involvement, and concerns about media plurality on the right in Britain, but regulatory experts say the Daily Mail owner’s minority stake wouldn’t block the deal. “Any sensible person inside the Labour party knows that the Telegraph could be a much less rabid enemy of Labour if it were under Cardinale,” adds the source.
On Thursday staff at the FT held a leaving party for Matthew Garrahan, the media editor who has taken a job as an operating partner in RedBird’s news division. There’s been speculation over whether he might take either the CEO or editor role if the deal goes through. S S uch a move has been talked up by Lionel Barber, the former FT editor who oversaw the title’s purchase by Nikkei in 2015, and was informally advising Cardinale on the deal over summer.
A shakeup is in the works.
Cardinale has described the Telegraph’s potential to become “a global counterpunch” to the New York Times, occupying the “white space” (see graphic) of the centre-right in the US media landscape (a lofty aim given that adjusted operating profit at the NYT last year totalled $131.4m). He has hired Fox and CNN veteran Chris Wallace to advise on “news and investments”, and former chief commercial officer of the Spectator, Melissa McAdden, who led efforts to expand partnerships and diversify revenue streams at the Telegraph’s former sister publication.
McAdden may end up tasked with conjuring up a specialised events arm for Telegraph, while more luxury propositions (in the vein of the FT’s How to Spend It), and a pivot away from low-cost, high-churn subscriptions are also being suggested as part of the plan.
All that will have to wait though. Some think it could be late next summer before RedBird’s ownership is realised, pending regulatory investigations. There are questions over whether Cardinale’s patience will wear thin, given RedBird’s other big-ticket investments in Warner Bros Discovery and All3Media, the production firm behind The Traitors.
Photograph by Evening Standard/Hulton Archive/Getty Images