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The UK is considering doubling the proposed threshold of foreign state ownership of the country’s news outlets in response to fears that setting the level too low would unnecessarily stifle dealmaking in the media industry.
The Labour government might allow stakes as large as 10 per cent, significantly higher than the 5 per cent level that the previous Conservative administration was consulting on, according to people familiar with the matter.
In March last year, the Tories changed the law to ban foreign states from owning stakes in UK news organisations for the first time, a move designed to block the takeover of the Telegraph newspaper by a US investor backed by the United Arab Emirates.
Ministers intended to introduce an exemption to the ban for small stakes under a certain threshold to allow passive investment, particularly in listed media companies, from sovereign wealth and state pension funds. A consultation on setting 5 per cent as the level was ongoing when Labour ousted the Tories at the July UK general election.
One person with knowledge of the current government’s thinking described 10 per cent as a “sensible” level, adding: “Its all about finding the balance to allow deals to happen without giving any editorial control or influence to foreign states.”
The Department for Digital, Culture, Media & Sport said: “We have not made any final decisions on the level of exception for ‘State Owned Investors’ from the new foreign state newspapers regime. We are still considering the consultation responses and will make an announcement in due course.”
The Telegraph is still without a permanent owner after the Barclay family lost control of the company because of unpaid bank debts, but an attempt to buy the group by RedBird IMI was blocked by the foreign state ownership ban. RedBird IMI is a joint venture between US fund manager RedBird Capital and Abu Dhabi-owned media investment company IMI.
People close to the sale said that RedBird Capital could still take a stake in the Telegraph separate to its partnership with IMI.
UK media groups have privately raised concerns with the government that setting the threshold too low could prevent them from being able to tap sources of money from cash-rich states in the Middle East. When the Telegraph was first put up for sale in 2023, for example, the Daily Mail’s owners held talks with investors from Qatar about potentially teaming up on a bid.
Media executives are also concerned the law will hit state pension funds, such as the vast Norwegian, Canadian and Australian funds that are shareholders in listed media companies.
Labour’s decision on where to set the ownership threshold may be controversial given the fierce debate last year among MPs about the risks of allowing foreign states the ability to exert influence on UK media.
Parliamentarians from both main parties were critical of RedBird IMI’s bid, as were executives at the Telegraph itself. Among anxious Tory MPs, a key concern was the potential for overseas control of a right-wing broadsheet seen as influential in their party leadership contests.
The sale of the Telegraph, which led to intense scrutiny over press freedoms in Abu Dhabi itself, soured relations between the UK and the UAE, which is a major investor in Britain.
Emirati officials expressed frustration about pejorative comments made about their state by a string of British politicians in relation to the proposed Telegraph deal. Former Tory leader Sir Iain Duncan Smith was among MPs who argued the UAE’s involvement would raise “security concerns” despite defence ties between two countries
Prime Minister Sir Keir Starmer travelled to Abu Dhabi last month hoping to reset relations.
