The United Kingdom is considering increasing the cap on foreign state ownership of British media
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The UK is considering doubling the proposed threshold for foreign state ownership of news outlets in the country in response to fears that setting it too low would unnecessarily stifle deals in the media industry.
A Labor government could allow stakes of as much as 10 percent, well above the 5 percent level consulted on by the previous Conservative administration, according to people familiar with the matter.
In March last year, the Tories changed the law to ban foreign countries from owning stakes in British news organizations for the first time, a move to prevent a takeover of the Telegraph newspaper by a United Arab Emirates-backed US investor.
Ministers intended to introduce an exemption from the ban on small holdings below a certain threshold to allow passive investment, particularly in listed media companies, from sovereign wealth and state pension funds. Consultation on setting the 5 percent level was underway when Labor ousted the Tories in the UK general election in July.
One person familiar with the current government’s thinking described 10 percent as a “reasonable” level, adding: “It’s all about finding a balance that allows deals to be done without giving any editorial control or influence to foreign countries.”
The Department for Digital, Culture, Media and Sport said: “We have not made any final decisions on the level of the ‘state-owned investor’ exception to the new foreign state newspaper regime. We are still considering the responses to the consultation 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 due to unpaid bank debts, but an attempt to buy the group by RedBird IMI has been blocked by a foreign 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 RedBird Capital could still take a stake in Telegraph separately from 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 source money from cash-rich Middle Eastern countries. For example, when the Telegraph was first put up for sale in 2023 The owners of the Daily Mail have spoken with investors from Qatar about a potential merger in the offer.
Media executives are also concerned that the law will hit sovereign pension funds, such as the huge Norwegian, Canadian and Australian funds that are shareholders in listed media companies.
Labour’s decision on where to set the ownership threshold could be controversial given a heated debate last year among MPs about the risks of allowing foreign countries to influence the UK’s media.
Parliamentarians from both main parties were critical of RedBird IMI’s bid, as were the Telegraph’s own executives. Among anxious Tory MPs, a key concern was the possibility of foreign control of right-wing outlets seen as influential in their party leadership contests.
The sale of the Telegraph, which has led to intense scrutiny of media freedoms in Abu Dhabi itself, has soured relations between the UK and the United Arab Emirates, which is a major investor in Britain.
Emirati officials have expressed frustration at derogatory comments about their country from a range of British politicians in relation to the proposed Telegraph deal. Former Tory leader Sir Iain Duncan Smith was among MPs who argued that UAE involvement would raise “security concerns” despite defense ties between the two countries
Prime Minister Sir Keir Starmer traveled to Abu Dhabi last month in the hope of resetting the relationship.
