After 717 days, two law changes, one election and a revolving cast of Tory power brokers, Emirati ministers and Downing Street policymakers, the tortuous sale of the UK’s Telegraph newspaper may — finally — be drawing to a close.
On Friday, RedBird Capital Partners agreed to buy the media group for £500mn, in a deal that would make the US private equity group the sole controlling owner. The transaction leaves the door open for Abu Dhabi’s IMI to take a minority stake, after the British government last week changed the law to allow up to 15 per cent of a domestic newspaper to be owned by a foreign state.
But two years after Lloyds Banking Group seized control of the Telegraph Media Group from the Barclay family, its owners since 2004, the deal remains an outline.
RedBird boss Gerry Cardinale — a former Goldman Sachs banker with little news pedigree — will take control of the UK’s leading rightwing broadsheet, with the Middle Eastern buyers for whom he originally instigated this deal relegated to minority backers.
He is still seeking UK investors to back the deal. And the American investor’s plans for the Telegraph are only just becoming clear.
“I don’t have a tremendous experience in news,” Cardinale, who manages $12bn in assets across RedBird’s portfolio of sports, media and entertainment, told the Financial Times on Friday.
“But I have a tremendous amount of experience growing intellectual property-based businesses and this is very familiar territory to me. All the foundation stones are there for me to do what I do really well, which is create a global media company rooted in world-class journalism.”
The news rookie — who initially had little interest in owning this kind of business, according to people close to the deal — will assemble a board of heavyweight advisers to help oversee the newspaper. Former FT editor Lionel Barber also acted as an informal adviser to Cardinale on the deal, according to several people familiar with the situation.
The new owner’s playbook centres growth on the US. “There is real white space in America in terms of centre right and there’s really no global counterpunch to the New York Times,” Cardinale said. “The Telegraph has got all of the foundations that enable it to aspire to that kind of global breadth and heft.”
The unusual structure of RedBird’s deal to buy the Telegraph reflects its troubled history: the US investor is in part buying the media group from itself.
RedBird IMI, the joint venture that is three quarters funded by Abu Dhabi royalty, first struck a deal to buy the Telegraph in 2023. After provoking uproar in the newspaper’s newsroom and on the backbenches of the UK parliament, the deal was blocked last year by the former Conservative government over fears around foreign state influence over a national newspaper.
The final say over the transfer of control between the joint venture partners still rests in Abu Dhabi, given its majority ownership of RedBird IMI — controlled by Sheikh Mansour bin Zayed al-Nahyan, vice-president of the United Arab Emirates and owner of Manchester City football club.
But the terms of the deal — which still requires regulatory approval — have been carefully crafted to ease political angst.
IMI is expected to take the now-maximum permitted 15 per cent interest in the newspaper. It would become a “passive investor”, said one person close to the deal, with no intention of taking a board seat. About £100mn — or about two times the group’s underlying earnings — will be funded through debt.
RedBird has committed to fund the remainder of the deal’s value, said people close to the transaction, although the group is in talks with other UK-based minority investors. Those include Daily Mail-owner Lord Rothermere’s DMGT, which is likely to take 10 per cent.
The US group — once dismissed by some as a front for the Abu Dhabi buyers — could find itself on the hook for at least £300mn. That money will not be coming from its Middle Eastern partners, say people close to the company, adding that RedBird does not have any IMI or other UAE money in its funds and will not take any debt funding from the Emirati state.
Those close to the talks said that IMI would have rather the government had set a higher threshold, but that 15 per cent represented a good compromise. “This will soft-land the whole saga so that the relationship between the two countries can get back to normal,” one said.
The Telegraph fiasco contributed to a souring of relations between the UK and UAE in recent years, according to people close to the deal.
Other issues, including investigations into the financial conduct of Sheikh Mansour’s Manchester City — the club denies all charges — also contributed. But Emirati officials were shocked and angered by the hostile comments made by MPs in parliament about the control of UK media.
“The UAE has been furious about how they were treated,” said one, a situation that also tested relations with Cardinale’s RedBird.
Since being elected last July, Sir Keir Starmer’s Labour government has tried to smooth relations with the Emirati state. The issue of foreign state ownership of UK media was raised by officials on the prime minister’s trip to the UAE in December, according to people familiar with the matter.
Around the same time, Cardinale — who was spending much of his time in Los Angeles overseeing a deal to buy Hollywood group Paramount — decided that he needed to take a more hands-on role to try to resolve the situation.
Cardinale met the newspaper’s management, editors and UK politicians, before becoming comfortable that there was an opportunity to generate decent returns from the business.
“As I watched everything play out, I saw that the right thing is for a growth equity investor like me to come in and take this thing to the next level,” Cardinale told the FT.
A deal began to take shape in January for Cardinale, after the end of an exclusive period for talks with a different preferred bidder, Dovid Efune, the owner of the New York Sun.
In March, the RedBird boss visited Downing Street to meet Varun Chandra, the business adviser to Starmer, and Sultan al-Jaber, a top UAE minister politician who has multiple roles in Abu Dhabi including head of its oil company. Representatives from the UK’s Department for Culture, Media and Sport also attended the meeting.
Officials — also being lobbied by other British media groups concerned that a valuable source of overseas funding had been throttled — sought a solution to allow IMI to protect at least some of its investment.
Even now, a deal is far from done. The rival bid by Efune, backed by former cabinet minister Nadhim Zahawi and millionaire investor Jeremy Hosking, remains on the table, although was struggling with financing.
But those involved are confident that there will be few of the issues that caused delays to date. None of RedBird’s existing UK investments are in news media, although Rothermere’s potential involvement may attract scrutiny over media plurality.
If successful, the takeover could be a fresh start for the Telegraph newsroom, reeling after two years in the headlines. RedBird plans to reinvest the cash made by the Telegraph alongside its own funds to increase digital subscriptions and grow its brand in the US.
Cardinale himself addressed Telegraph senior managers on Friday, striking what one insider called an “apologetic and ebullient” tone — “albeit realistic about how difficult it would be to crack America”.
He emphasised the independence of its editorial team, pledging funds for acquisitions and setting an ambition to boost cash flow to £100mn in what he described as a long term holding.
In a nod to the Telegraph political heartland, he mentioned that he had met Conservative leader Kemi Badenoch this week.
A resolution might also ease one sore point in the UK-UAE relationship, said people familiar with the Emirati state’s position.
“This government inherited a relationship with the UAE that was in a difficult place,” said one UK official.
“The country is a really important regional ally and investor in the UK . . . They need to see they have a relationship that is valued with the British government.”
