UK considers higher 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 the country’s news outlets amid fears that setting the threshold too low would unnecessarily inhibit dealmaking in the media industry.

A Labor government could allow stakes as large as 10 percent, significantly higher than the 5 percent level suggested by the previous Conservative administration, 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 agencies for the first time, a move designed to block a takeover of the Telegraph newspaper by a United Arab Emirates-backed US investor.

Ministers also wanted to introduce exemptions from restrictions on passive investments from sovereign wealth and state pension funds, particularly in listed media companies, for small stakes under a certain threshold. When Labor ousted the Tories in July’s UK general election, there was a consultation on setting 5 per cent as Labour.

A person with knowledge of the current government’s thinking described the 10 percent as a “sensible” level, adding: “It’s all about finding the balance to allow deals to happen without giving editorial control or influence to foreign states.”

The Department for Digital, Culture, Media and Sport said: “We have not made a final decision on the level of the ‘state-owned investors’ 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.”

Telegraph is still without a permanent owner after the Barclay family lost control of the company due to unpaid bank debts, but an attempt by Redbird IMI to buy the group was blocked by foreign state ownership restrictions. 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 separate stake in Telegraph for 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 funding sources from cash-rich states in the Middle East. When the Telegraph was first put up for sale in 2023, for example, The owners of the Daily Mail have discussed About potentially making a bid with Qatari investors.

Media executives are also concerned that the law will hurt state pension funds, such as the huge Norwegian, Canadian and Australian funds that are shareholders of listed media companies.

Labour’s decision on where to set the boundaries of ownership is likely to be controversial due to intense debate among MPs last year over the risk of giving foreign states the power to influence the UK’s media.

MPs from both main parties criticized Redbird IMI’s bid, as did Telegraph executives. Among concerned Tory MPs, a major concern was the prospect of foreign control of a right-wing broadsheet seen as influential in their party leadership contest.

The sale of Telegraph, which led to an intense investigation into press freedom in Abu Dhabi, soured relations between the UK and the United Arab Emirates, a major investor in Britain.

Emirati officials have expressed dismay at disparaging comments made about their state by a string of British politicians over the proposed telegraph deal. Former Tory leader Sir Ian Duncan Smith was among MPs who argued that the UAE’s involvement would raise “security concerns” despite the defense ties between the two countries.

Prime Minister Sir Keir Starmer visited Abu Dhabi last month in hopes of restoring ties.