Inside the battle for ‘trophy asset’ the Telegraph – and for the soul of Tory Britain | Telegraph Media Group

With the Conservative party trailing Labour by nearly 20 points in the polls, it needs all the help it can get if it is going to have a fighting chance at the next election.

So Downing Street strategists privately wonder why the Daily Telegraph – arguably the UK’s most staunchly rightwing paper – is not being more supportive of Rishi Sunak in its coverage.

Similarly, senior figures at the Telegraph’s nearby headquarters in central London have been pondering their own puzzle: why has Sunak not been more helpful in blocking an audacious attempt by a Gulf-backed, US-fronted fund to take it over?

The battle for control of the Telegraph newspapers and the Spectator magazine – which were put up for sale in October after they were seized from the Barclay family – has been playing out in public and private over the past six months.

Insiders say the saga reveals much about the Conservative party and the prime minister himself, as they stare down the barrel of a humiliating election defeat that could reshape the UK’s political landscape and tear apart its oldest political party. It is a story of how, even amid declining influence of traditional media, the sale of a historic right-leaning newspaper to a foreign state became a major political flashpoint – and an opportunity for rising stars in the Tory party to curry favour with powerful media figures.

The government has belatedly taken tough action on the deal, but only after a bruising lobbying campaign that played out in the Telegraph’s own pages. In a move that has surprised even those agitating against the deal, Lucy Frazer, the culture secretary, announced legislation earlier this month to block foreign states from owning stakes in British newspapers.

That move scuppered the attempt by RedBird IMI, a consortium backed by Sheikh Mansour bin Zayed al-Nahyan, the vice-president of the United Arab Emirates and owner of Manchester City football club, and fronted by one of the most prominent figures in US media, the former CNN president Jeff Zucker, to acquire the Telegraph and Spectator.

The allure of influence

“It is a genuine issue of freedom of the press,” said Charles Moore, a peer and former editor of the Daily Telegraph, Sunday Telegraph and the Spectator who has vocally opposed the deal. “It has helped with the idea that although we need to be open to the world, in this country not everything is for sale.

“My only regret about it all – apart from the fact that the bid came at all – is that it all took an unnecessarily long time, when the fundamental point was clear from the beginning. A more alert government would have recognised that straight away. I’m glad the government did recognise it: I don’t think they behaved badly; I just think they were rather indecisive.”

A well-connected senior business figure said the way things unfolded was “a good example of Rishi and No 10 not getting politics. A really good operation would have gone: this is going to be a massive issue for the Telegraph in an election year.”

The battle for the Telegraph and Spectator began when they were put up for auction after the Barclays family lost their grip on them over £1.2bn of unpaid debts. The lender – Bank of Scotland, part of Lloyds Banking Group – seized control of titles that the reclusive, island-dwelling Barclay brothers bought in 2004.

Founded 168 years ago by the Canadian-born British army officer Arthur B Sleigh, the Telegraph is seen as a mouthpiece of Conservative Britain. When the sale process began in October, the allure of owning that mouthpiece was too much to resist for several media barons. News Corp’s Rupert Murdoch, the Daily Mail group’s Lord Rothermere, GB News’s hedge fund owner Sir Paul Marshall and Axel Springer’s Mattias Döpfner all expressed their interest.

Telegraph Media Group, which has a subscription-based model, claims it had 1m subscriptions by the end of 2023, of which 117,586 were print and 688,012 digital. That total was flattered by 151,310 bonus digital subscriptions (which existing subscribers can give away to friends and family), 45,404 free trial digital subscriptions. A total of 230,112 subscriptions were classed as “other”, and included wine subscriptions and puzzles as well as those of Chelsea Magazine Company, which it bought last year and publishes titles such as Classic Boat. Its 2022 operating profit before exceptional items increased to £40.1m from £33.3m in 2021, bolstered by digital subscriptions and cost management.

Despite declining newspaper profits, the Telegraph’s relationship with the Tory party and its right-leaning middle-class readership offer its owner incalculable political influence. In her book about the Barclay family, Jane Martinson describes the Telegraph “as redolent of a certain kind of Britishness as earl grey tea and umbrellas”.

Rather than throw its name into the hat to buy the publications, RedBird IMI and its frontman Zucker announced in November it had loaned the Barclays the money they needed to pay off their loan to Lloyds, in effect buying their debt. The result of this was to bring the Telegraph newspapers and Spectator out of receivership and halt the sale process. It looked like a coup.

Those critical of the bid suspect the UAE’s motivation was to acquire a major English-speaking heritage brand – notably one that has been sceptical of climate policies – to push its message out to the west. (RedBird IMI has always denied its bid had anything to do with a pursuit of influence.) The group had plans to expand Telegraph coverage in the US.

Zucker and others said the UAE, which owns 75% of the consortium, would not exert any editorial influence over the publications they were buying. Zucker said he would resign if there was any attempt to interfere. RedBird IMI has always rejected suggestions that it is owned by a foreign state.

Meanwhile, British establishment figures including the former chancellor George Osborne, now a partner at the boutique investment bank Robey Warshaw, and the former Ofcom chief Ed Richards, now at Flint Global, were brought in as advisers to help seal the deal. Senior Telegraph figures believe Osborne was offered a substantial win fee if he helped get the deal through. Osborne did not respond to a request for comment.

Concern had set in across the Telegraph newsroom, and the paper began sounding the alarm in its leader columns. On 24 November, Lord Moore wrote an article arguing it would be “unforgivable” to allow the deal to go ahead.

Three days later, on 27 November, Sunak met representatives of the ​​Abu Dhabi and Mubadala investment companies, according to a Cabinet Office transparency release published last week. A government official told the Guardian the RedBird IMI bid was not discussed at the meeting.

Delicate balance

No 10 was reluctant to get involved in the dispute at first, viewing the matter as a commercial dispute. A desire not to harm relations with the UAE – a key investor in everything from windfarms to football clubs – was another factor. A Tory aide who helped coordinate opposition to the deal said: “They wanted to do this in a delicate way. There were diplomatic relations with the UAE that they didn’t want to damage.”

Abu Dhabi’s total trade in goods and services (exports plus imports) between the UK and UAE was £25.3bn in the year to the end of the third quarter of 2023, an increase of 21.4% from the four quarters to the end of the third quarter of 2022, according to government figures.

UAE-backed investments include the acquisition of Manchester City football club, real estate, and various ports including Southampton. Ministers have also sought UAE investment for Sizewell C, the nuclear power plant project in Suffolk.

The government has tried provide reassurance that the proposed laws only apply to newspaper groups. The media minister Stephen Parkinson said this month: “The UK remains one of the most open economies in the world”. He said this Tuesday that sovereign wealth funds or pensions funds would be able to hold up to a 5% stake and that the government would consult on widening the scope of the new regime to include news websites.

Beware Boris

Some suspect that Sunak’s advisers were less concerned about RedBird IMI than they were about some of the other potential bidders for the Telegraph and Spectator – because of their links to former prime minister Boris Johnson.

“They thought: is this the Boris takeover?” said the business figure, who has been closely following the sale process.

Around the same time the Telegraph was put up for sale, the rightwing TV channel GB News announced it had signed Boris Johnson as a presenter and that he would be playing “a key role” in its election coverage. The Daily Mail also pays Johnson a rumoured six-figure sum for a weekly column.

For No 10, seeing the Telegraph move closer into Johnson’s orbit would be problematic. Despite talks that could see Johnson help the Tory election campaign, the bad blood between him and Sunak runs deep. Marshall, who co-founded and still chairs the $62bn Marshall Wace hedge fund, has become an increasingly active player in UK politics. As an enthusiastic backer of Brexit, a successful swoop on the Telegraph and Spectator would cement his influence on Conservative politics.

Johnson was conspicuously silent about the UAE deal. “He was concerned about the bidding, as you might expect a former Telegraph journalist to be,” a senior figure at the Telegraph said. “He didn’t welcome it at all, but first of all, he writes a column for the Mail, so that sort of makes him a bit parti pris.

“And secondly, I think he didn’t want to insult the Abu Dhabi royal family directly because they’d done so much when he was mayor of London to advance various infrastructure projects … He felt sort of beholden to them because of that. He wanted them to lose, but didn’t want to pile it on.” A spokesperson for Johnson said he had not been involved and any claims to the contrary were “phantasmagorical speculation”.

A Telegraph source said: “Our editorial position on the RedBird IMI deal is well established – in the paper – it has absolutely no read-across to our wider coverage about the government and its activity.”

Rising Tory stars seize the moment

With the former prime minister silent and the current one not getting directly involved, it was left to rising-star Tory cabinet ministers – chiefly the business secretary, Kemi Badenoch, and the security minister, Tom Tugendhat – to raise concerns privately. Among senior Telegraph executives and writers, it was noted who was being helpful and who was not.

It was also an opportunity for Frazer – who was made culture secretary in November – to prove herself. The senior business figure said of Frazer: “She has rightly understood that in her time as DCMS sec this is probably the most high profile thing that she does … She’s got friends in the Telegraph and the media forever after this.”

By the end of November Frazer had issued a public interest intervention notice (PIIN) – flagging concerns about the deal to the competition regulator. A protracted process got under way, and Frazer issued a second PIIN earlier this month.

Developments in parliament were outpacing those in government. Robert Jenrick, the former immigration minister, coordinated a letter signed by 100 MPs in opposition to the deal.

In the House of Lords things came to a head when Tina Stowell, a Tory peer and formal Lords leader who chairs the communications and digital select committee, tabled an amendment to give parliament a veto over foreign state ownership of newspapers.

Within a short space of time the government announced that it would bring forward its own legislation to stop foreign states from acquiring British newspapers and periodicals.

Fraser Nelson, the editor of the Spectator, said: “It was a case of parliament versus the government and the government had had no option but to cede.” He added: “If you accept freedom of the press as a principle that most democracies hold dear, then governments should not own newspapers full stop.”

Next steps

RedBird IMI has been given until Tuesday to respond before Frazer refers its bid to the competition watchdog. To understand what may happen next, it is worth going back to the first PIIN she issued.

Though the government raised concerns about RedBird IMI taking over the Telegraph and Spectator, it did not stop RedBird IMI from acquiring the £1.2bn debt the Barclay family owed Lloyds. This leaves the UAE in a position where it cannot easily walk away from the deal.

The business figure said: “They were worried about the diplomatic consequences of not letting them bid – and now they are in a place where the UAE has spent £1.2bn on an asset which isn’t worth half that.”

If RedBird IMI were to sell, there is likely to be no shortage of bidders, including from some of the media proprietors such as Murdoch, Marshall and Rothermere, who first expressed an interest in the autumn.

The key question is the price they would be willing to pay. There could also be serious competition concerns – if, for example, Rothermere’s DMGT were to buy Telegraph Media Group its share of the UK’s print market would rise from 42% to 47% – although some analysts argue that in an online world, print share is now less significant.

Johnathan Barrett, the director of media and digital research at the investment bank Panmure Gordon, said: “I would expect anyone with a UK news operation to take a look as there would be significant synergies in printing, central services and technology.”

Alex DeGroote, an independent media analyst, said: “What has happened is a very effective lobbying campaign, People use the phrase trophy asset a lot but it really does apply to the Telegraph.”