Peers clash in pivotal vote on Telegraph ownership

Telegraph

11 hours ago

The fate of The Telegraph is to be decided this week in a contentious House of Lords vote on foreign state shareholdings.
The Government is pressing ahead on Tuesday with legislation to allow the United Arab Emirates (UAE) to retain a passive stake of up to 15pc.
Easing an outright ban on foreign powers investing in newspapers is viewed as crucial to unlocking a £500m takeover of The Telegraph by RedBird Capital, an American private equity firm. A previous bid, majority-funded by the UAE, was blocked last year following a cross-party outcry over press freedom.
A Lords vote on a statutory instrument that has already been approved by the House of Commons would normally be a formality. However, the Liberal Democrats have tabled a rare 'fatal motion' which could block the proposals and effectively overrule the elected chamber.
Writing in The Telegraph on Monday, Lord Fox, the Lib Dem business spokesman, labelled the legislation 'nothing more than a desperate attempt to appease foreign rulers'. The UAE, a significant foreign investor in Britain, took offence at the decision to block the previous takeover bid and suspended some diplomatic ties.
Lord Fox said: 'By letting the Government defy Parliament, which effectively banned foreign state shareholdings last year, there will likely be a domino effect. This could leave many of our newspapers susceptible to the advances of foreign governments.
'This issue transcends party allegiances, and if we pass the fatal motion tabled in my name we can stop this dangerous legislation in its tracks.'
The Conservatives are expected to support the Government. However a group of Tory rebels have signalled that they will back the fatal motion, and Lord Fox said he had drawn further support from Labour, cross-bench and non-aligned peers.
Also writing in The Telegraph, Lord Black, a Conservative peer and the deputy chairman of Telegraph Media Group, said of the Lib Dem motion that 'the hypocrisy is breathtaking'.
The peer was a leading figure in efforts by news publishers to resist curbs on press freedom in the wake of the Leveson Inquiry. He said the Lib Dems then advocated 'onerous statutory controls wholly inimical to freedom of expression'.
Lord Black said: 'My colleagues in the Lords should not fall for it and understand that this is not a parliamentary game. This is deadly serious. The future of the British press hangs in the balance.'
He warned that allowing passive stakes of up to 15pc for foreign state-linked investors was critical at a time of severe pressure on traditional news publishing revenues. The takeover of The Telegraph should be welcomed, given the 'watertight safeguards to protect editorial independence in place', Lord Black added.
If the legislation passes, the UAE is in line to become a passive minority investor. Any suspicion of the Gulf state influencing The Telegraph could spark an official investigation and action to force it out as a shareholder.
Lord Rothermere, the Daily Mail owner, Sir Leonard Blavatnik, the global media investor, are also expected to take small stakes in a deal spearheaded by Gerry Cardinale, the founder of RedBird.
RedBird has been preparing to formally submit the takeover for regulatory scrutiny soon, and working on growth plans.
It is unclear what would happen if peers blocked the legislation, beyond further uncertainty for The Telegraph.
It has been more than two years since its previous owners, the Barclay family, lost control in a dispute with their lender Lloyds Banking Group. The UAE helped the family repay their overdue debts in a misguided manoeuvre intended to secure ownership of The Telegraph.
We can stop this dangerous legislation in its tracks
By Lord Fox
A robust free press is a pillar holding up democracy. And The Telegraph has been a bastion of our 'fourth estate' since 1855. But this could all end when on Tuesday the Government seeks to overturn the will of Parliament and let investors controlled by foreign powers take stakes of up to 15pc in our press.
This exercise in foreign influence on our media will start with The Telegraph, for which a bid that includes a United Arab Emirates-controlled vehicle is on the table. But it won't end there.
By letting the Government defy Parliament, which effectively banned foreign state shareholdings last year, there will likely be a domino effect. This could leave many of our newspapers susceptible to the advances of foreign governments.
Additional new legislation, which is also being debated, will extend their ability to buy stakes of up to 15pc to online news publications.
I am sorry to say that this is nothing more than a desperate attempt to appease foreign rulers.
That's why I'm calling on all my House of Lords colleagues to act. This issue transcends party allegiances, and if we pass the fatal motion tabled in my name we can stop this dangerous legislation in its tracks.
It is now or never. We really do stand at a Rubicon.
I am deeply grateful for the support and friendship of colleagues across party lines, including Conservatives, Labour, cross-bench and non-aligned peers, on this issue. They all understand how serious it is for the Lords to take such action. But we cannot sit by and watch this happen before our eyes.
So, I am sincerely hoping that the House will be full on Tuesday. Voting for a fatal motion is rare but not unknown. It should be reserved for fundamental issues like this.
I will remind fellow Lords that the Government's plan deliberately subverts legislation passed only 15 months ago. I will explain that the initial instrument has already been exposed as faulty in that it allows for multiple foreign states to take stakes of 15pc each. A corrective measure will be tabled in the autumn, but the Government ploughs on regardless in the meantime.
Who knows what damage will be done before that happens?
Then I will explain that there is every likelihood of other UK media assets also having significant foreign state ownership. And I will take on the naive idea that these 15pc tranches of our free press will not affect the news agenda.
Lisa Nandy, the Culture Secretary, claims that it will act if these foreign states affect editorial freedom. But as the authoritative Baroness Butler-Sloss asked in Parliament last week: 'My Lords, how on earth would the Secretary of State know?'
Many colleagues will on Tuesday point to other major concerns about the Telegraph bid. The list of consequences, unintended or otherwise, is long. Meanwhile, the Government is rushing this legislation, even though they know it has been badly drafted.
Our country's constitutional and societal settlement is not codified, it is woven through our institutions and laws, and it sits on foundations of transparency, accountability and freedom.
We won't feel the impact of this legislation the day after it passes, but its corrosive nature will eat away at those foundations. When press freedom starts to fail, it will be too late.
Peers have a chance to stop this madness. If we do, it will spare The Telegraph from the first instance of foreign government ownership. If we do not it will by no means be the last.
The future of press freedom is in our hands.
Lord Fox of Leominster is Liberal Democrat spokesman for business, energy and industrial strategy
These Lib Dem shenanigans are breathtakingly hypocritical
By Lord Black
If the consequences were not potentially so damaging and the constitutional implications of thwarting the will of the House of Commons not so serious, there would be something mildly amusing about the attempt by Liberal Democrats in the House of Lords to block vital investment in the UK media in the name of 'press freedom'.
I've spent my entire career defending press freedom. I have often had to do that in the teeth of Lib Dem efforts to shackle the press with onerous statutory controls wholly inimical to freedom of expression, not least in the wake of the Leveson Inquiry.
Their motives in moving a 'fatal motion' in the Lords to block carefully calibrated proposals to allow foreign investment in the UK's media – passed with an overwhelming majority in the democratically elected House of Commons – are born not of any principle, but pure opportunism.
The hypocrisy is breathtaking. My colleagues in the Lords should not fall for it and understand that this is not a parliamentary game. This is deadly serious. The future of the British press hangs in the balance.
The facts are these and they are very straightforward. Two years ago, during an auction for the sale of Telegraph Media Group (of which I am deputy chairman), a bid was made for its purchase which raised matters of principle because the majority of shares would have been owned by a sovereign-controlled media company.
That bid was blocked by the then-Conservative government. At the same time it recognised that the UK media desperately needed investment and that it would be wrong to rule out potential sources of funding from foreign state funds, provided it was carefully controlled and monitored.
That principle was agreed by Parliament with support from every party and without even a vote. It was the right thing to do.
Initially, the then-government looked at setting the threshold for such investment at 5pc. Rightly, it decided that it ought to seek views on whether that was the right level from people actually involved in the business.
After full consultation the new Government listened to those views. It sensibly took account of the serious challenges facing UK media and concluded the threshold might reasonably and proportionately be set at 15pc, while limiting it by law to investments that are strictly passive in nature.
Under the long-established and effective UK merger regime, this is a figure below which an investor cannot be deemed to have material influence on a business. It is also far stricter than the national security investment regime which permits shareholding in UK assets – including in nuclear power stations – up to 25pc.
The Government then undertook a second consultation and published an impact assessment on the proposal. During the course of that process, my colleague Baroness Stowell with her eagle eye highlighted a lacuna in the regulations which do not currently limit investments to a single 15pc stake-holding. This loophole will be closed with further regulations which Parliament will table in the autumn.
So, here we have a set of proposals which has been endlessly consulted on and scrutinised at every stage, is supported by all the stakeholders and which has had overwhelming support in Parliament. Most importantly of all, media businesses themselves say they are absolutely crucial to the future of the free press.
The news media industry in the UK is facing an existential crisis. The shift to digital journalism has put enormous pressure on the revenues of all publishers. The voracious appetite of the unaccountable, unregulated platforms with seemingly unlimited resources amplifies the threat.
Tragically, many titles have closed. Thousands of jobs have been lost, particularly in the local press. The future of many more titles hangs in the balance, with profound implications for democracy.
Do we want British independent media to survive? If we do, we must will means as well as ends.
Publishers such as The Telegraph need to raise capital to innovate and compete with the big online platforms and their unlimited resources. The likes of Facebook are not subject to onerous investment restrictions either.
That calls for private equity with proven experience in, and track record of, growing media companies. With watertight safeguards to protect editorial independence in place, we should warmly welcome it and not treat it as some kind of pariah. It'll be good for growth and good for the media.
I have thought long and hard about speaking out. I do so because the free press which I have spent so much of my life defending is under threat as never before, with profound implications for democracy. I do so because I believe in economic growth and the future of the creative economy. I do so because I love The Telegraph. Its fate is intimately bound up with the shenanigans in Parliament this week.
That is why I will be voting to ensure these crucial regulations pass and allow vital investment in British media, carefully controlled to ensure its independence and freedom is fully protected, to flow. I very much hope my colleagues will, too.