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UK moves to ban foreign state ownership of newspapers, blow to Telegraph bid

A bold effort by American media executive Jeff Zucker and his Emirati backers to acquire London's Daily Telegraph The newspaper appeared to be on life support on Wednesday after the British government proposed legislation banning foreign ownership of newspapers and news magazines.

Prime Minister Rishi Sunak's move would torpedo Mr Zucker's bid in its current form, which relies largely on funding from investment partners in the United Arab Emirates. The use of Emirati funds has caused an outcry at Westminster over foreign influence in the British media, given the outsized importance of the Telegraph and its sister publication, The Spectator, to Mr Sunak's Conservative Party.

Mr. Zucker's venture capital firm, RedBird IMI, may now try to salvage its bid for the publications by finding new investors and diluting the Emiratis' majority stake to a level permitted by the government's proposed rules.

“We are extremely disappointed by today’s developments,” said a spokeswoman for RedBird IMI. “To date, RedBird IMI has made six investments in the UK and US, and we believe the UK media environment merits further investment. The company added that it “will now evaluate our next steps.”

The attempt by Mr. Zucker, the former chairman of CNN, to reinvent himself as Britain's unlikely news mogul has shocked many of the country's top media players, including Rupert Murdoch, who had considered acquiring The Telegraph for himself after the newspaper was bought. at auction last year.

Prominent conservatives, including broadcaster Andrew Neil and Fraser Nelson, editor of The Spectator, pounced on Mr. Zucker's reliance on Emirati funds, turning the deal into a political flashpoint around foreign influence on British institutions and galvanizing opposition from Conservative Party lawmakers.

The deal was already under review by British regulators. In the House of Lords on Wednesday, Stephen Parkinson, Minister for Culture, Communications and Creative Industries, promised to propose an amendment to the legislation that would prevent foreign state ownership of news publications. The law should be adopted by Parliament, where the conservatives have a good majority.

“We have listened carefully to the arguments made by parliamentarians in recent weeks and are taking steps to explicitly exclude foreign state ownership, influence or control over newspapers and news periodicals,” a spokesperson said. – government spokesperson.

Resistance to the offer was less about Mr. Zucker, who said he would not run the paper's day-to-day operations, than about his main partner.

RedBird IMI is a joint venture between RedBird Capital, an American private equity firm, and International Media Investments, an Abu Dhabi investment fund controlled by Sheikh Mansour bin Zayed al Nahyan, Vice President of the United Arab Emirates and member of the royal family of Abu Dhabi.

Sheikh Mansour has already blazed a trail in Britain, arousing the ire of some with his ownership of Manchester Citya Premier League football club known for its deep pockets and aggressive financial tactics.

Criticisms cited the United Arab Emirates autocratic government, a checkered human rights record and friendly ties with Russian President Vladimir V. Putin are all reasons to disqualify the candidacy of the 168-year-old Telegraph, often called The Torygraph for its influence in politics conservative. Those responsibilities, lawmakers said, outweighed Mr. Zucker's editorial record at CNN, as well as the investor group's commitment to putting in place provisions to safeguard the newspaper's independence.

Michael Forsyth, a former Conservative minister in the House of Lords, said on Wednesday that the bid “is what it is, which is an influence strategy”.

“Money talks and ownership matters,” Mr. Forsyth said, adding that such influence should not extend to investors with ties to a government that “puts journalists in jail, expels critics and shuts down any criticism, a country which is at the bottom of the class”. in the international tables of freedom.

Any hope that the opposition Labor Party could back the deal evaporated earlier this week when shadow culture secretary Thangam Debbonaire said his party would scuttle the deal if it took power after general elections scheduled for later this year. Labor leads the Conservatives in most polls by around 20 percentage points.

“Labor is unequivocal and unambiguous on this,” Ms Debbonaire told Mr Nelson, the Spectator editor, in an interview. “Ownership by a foreign power is incompatible with freedom of the press, essential in a democracy.”

If Mr. Zucker withdraws his bid for The Telegraph, one potential buyer would be Paul Marshall, a British hedge fund billionaire. Mr Marshall funded GB News, a new television channel which established itself as a kind of budding Fox News, providing a platform for populist firebrands like Nigel Farage.

This is not the first time that the British media world has shown hostility towards foreigners. Mr Murdoch's purchase of The Times of London in 1981 was called a hijacking by an upstart Australian. Mr Murdoch, who also owns The Sun, is set to become owner of The Spectator, a prestigious weekly.

Mr. Zucker's odyssey to acquire The Telegraph began last year, when RedBird IMI agreed to repay $1.47 billion in debt owed by the paper's former owners, the Barclay brothers. The deal had to be approved by British regulators, who agreed to postpone the decision until March.

As criticism mounted, Mr. Zucker traveled to London several times to defend his cause. Last week, he appeared on a popular British podcast, “The News Agents,” and accused Mr. Neil of opposing the deal only after he sought, and was denied, a position as chairman of the Telegraph and the Spectator.

“This may come as a shock, but Andrew Neil is pretty hypocritical about this,” Mr. Zucker said on the podcast. Mr. Neil countered that he had never run for president and said that “Mr. Zucker's memory was playing tricks on him.”

Mr. Zucker had better luck with another deal in Britain. Last month, RedBird IMI struck a $1.45 billion deal to acquire All3Media, a production company that oversaw hits like “The Traitors” and “Fleabag.”

Benjamin Mullin And Étienne Castle contributed reports

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