Ex-Ofcom chief Richards advises Zucker as Telegraph deal faces investigation
Ed Richards, the former head of media regulator Ofcom, is acting as a secret lobbyist for RedBird IMI, the Abu Dhabi-backed media outlet which is in advanced talks to take control of The Daily Telegraph.
Sky News has learned that Flint Global, the public affairs firm founded by Mr. Richards, RedBird is advising IMI on its interest in the Telegraph newspapers and Spectator magazine.
RedBird IMI, which is chaired by former CNN president Jeff Zucker, on Monday confirmed Sky News’ exclusive reveal from last week that it backs the Barclay family’s efforts to thwart a wider auction of the titles.
City sources said Flint Global had been hired because of Mr Richards’ track record of involvement in public interest intervention notices (PIINs) – government investigations by the media and competition watchdogs that can lead to deals being blocked.
In recent weeks, calls to block foreign majority ownership of the Telegraph have gained momentum as MPs and peers – mostly from the Conservative Party – have raised concerns about the Gulf’s funding of the papers.
Neil O’Brien, MP for Harborough, said on Friday: “The Telegraph and Spectator are two of our most prestigious publications.
“Obviously there is interest from all over the world to get control of them.
“I hope [the government] will scrutinize the financing and ownership structure of any deal and put them through the usual PIIN process.”
A court hearing to liquidate a Barclay family’s holding companies to smooth a sale of The Daily Telegraph was adjourned on Monday after an offer to repay in full more than £1.1bn. to Lloyds Banking Group.
The family hopes to deliver a full repayment of the debt before the end of the month.
The adjourned hearing is expected to take place shortly after that date if Barclays fails in this goal.
Initial bids for the Telegraph and Spectator will be submitted on November 28, with billionaire hedge fund tycoon Sir Paul Marshall and Daily Mail owner Lord Rothermere among the potential bidders.
However, the emergence of a potentially imminent deal between Barclays and Lloyds threatens to derail the auction, according to multiple sources.
RedBird IMI said on Monday it would convert the £600m loan to the family for equity “on an early occasion”.
This statement appears to undermine Barclays’ earlier claim that its funding partners were merely providing debt finance and that there was therefore no justification for ministers to issue a PIN.
“Under the terms of this agreement, RedBird IMI has an option to convert the loan secured against the Telegraph and Spectator into equity and intends to exercise this option at an early opportunity,” it said.
“Any transfer of ownership will of course be subject to regulatory review and we will continue to cooperate fully with the government and the regulator.”
RedBird IMI plans to lend approximately £600m to the family, with the rest of the debt being funded by a member of Abu Dhabi’s royal family – said to be Sheikh Mansour bin Zayed Al Nahyan – the ultimate owner of a controlling stake in Manchester City Football Club .
The repayment of the debt is nevertheless subject to due diligence by Mr. Zucker’s vehicle.
Barclays has made a number of increased offers in recent months to reject an auction and last month raised its proposal to £1bn.
However, Lloyds has repeatedly told the family and its advisers that they would either have to repay the debt in full or join the auction with other bidders.
Talks orchestrated by Goldman Sachs, the investment bank, have now begun with potential buyers, which also include London-listed media group National World.
Until June, the papers were headed by Aidan Barclay – the nephew of Sir Frederick Barclay, the octogenarian who, with his late twin Sir David, engineered the takeover of the Telegraph 19 years ago.
Lloyds had been locked in talks with Barclays for years over refinancing loans given to them by HBOS prior to the bank’s rescue during the 2008 banking crisis.
The family’s debt to Lloyds also includes some funding linked to Very Group, the Barclay-owned online shopping business.
Ken Costa, the veteran City banker who advised the Barclay brothers on their 2004 purchase of the Telegraph and counts the sale of Harrods to Qatar Holding among his other flagship deals, acts as a strategic adviser to the family.
The Telegraph and Spectator disposals are being overseen by a new group of directors led by Mike McTighe, the boardroom veteran who chairs Openreach and IG Group, the financial trading firm.
McTighe has been appointed chairman of Press Acquisitions and May Corporation, the respective parent companies of TMG and The Spectator (1828), which publishes the media titles.
In July, Telegraph Media Group (TMG) published full-year results that showed pre-tax profits had risen by a third to around £39m in 2022.
A successful digital subscription strategy and “continued strong cost management” were cited as reasons for the company’s earnings growth.
“Our vision is to reach more paying readers than at any other time in our history and we are firmly on track to reach our target of 1 million subscriptions by 2023 ahead of our year-end target,” said Nick Hugh, TMG’s CEO. .
“RedBird IMI is fully committed to maintaining the existing editorial team of the Telegraph and Spectator publications and believes that editorial independence for these titles is essential to protect their reputation and credibility,” Monday’s statement read.
“We are excited about the opportunity to support the titles’ existing management to expand the reach of the titles in the UK, US and other English-speaking countries.”
Richards could not be reached for comment.