Amendment to British Media Ownership Act Ends in Parliamentary Disaster - Latest Global News

Amendment to British Media Ownership Act Ends in Parliamentary Disaster

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A crucial change to the law banning foreign ownership of British newspapers following the blocked takeover of the British Telegraph failed to pass after the parliamentary session for the pre-election “cooling-off period” was missed.

Ministers and politicians had discussed a clause that would allow foreign states to acquire small stakes – probably set at five percent – ​​in newspaper groups in order to enable smaller, passive investments by sovereign wealth funds and state pension funds.

The change was to be made in the Digital Markets, Competition and Consumers Bill, which was passed by the British Parliament on Thursday.

However, the amendment failed to pass the bill, which was rushed through before Parliament was adjourned ahead of the July 4 general election.

The bill aims to limit the power of large technology companies and give the UK competition authority greater oversight.

MPs, peers and newspaper bosses had fiercely debated the five percent shareholding threshold after Rishi Sunak’s government blocked the sale of the Telegraph Media Group to Abu Dhabi-backed RedBird IMI.

MEPs expressed concern that a US-managed fund, with around three-quarters of its funding coming from Abu Dhabi, would give the UAE undue influence over free speech and press freedom in the UK.

Without this change, the law would effectively prevent any nationalization of a newspaper group. This prospect is likely to worry newspaper executives who are hoping to attract at least partial investment from the wealthy Middle Eastern and Gulf states in the future.

Media groups are also concerned that the law could prevent pension funds that provide public sector money abroad, such as the giant Canadian and Australian funds, from becoming shareholders.

In its current form, the law would also likely prevent a sovereign wealth fund from acquiring a stake in a listed company such as regional newspaper group Reach PLC.

For example, the Norwegian sovereign wealth fund already owns small shares in listed British newspaper groups, even though the law does not apply retroactively.

The change must now be implemented in a secondary law after the general election, say people familiar with the process. A consultation on the exact hurdle is also to be extended until then.

The consultation period was supposed to end at midnight on Friday, but now it ends on 9 July.

The next government must decide whether to set the threshold at five percent, at a different level or not at all.

The failure to reach agreement on the law change is unlikely to affect the timing of the sale of the Daily Telegraph and Sunday Telegraph newspapers and the Spectator magazine, people familiar with the matter say, because any sale is likely to be completed after July 4.

Many of the bidders who have expressed interest – including DMGT, the group that owns the Daily Mail, Rupert Murdoch’s News UK and hedge fund boss Paul Marshall – are also likely to face scrutiny from the Competition and Media Authority.

RedBird IMI has asked for expressions of interest from potential buyers. Initial responses suggest more than three dozen groups could make a bid for the British media group, two people familiar with the process said.

The first round of bidding is expected to begin in the coming weeks. The investment banks Robey Warshaw and Raine Group are advising on the sale.

RedBird IMI wants to recover from Lloyds Banking Group the £600 million it spent to buy the group’s debt, which could have been converted into equity.

Culture Minister Lucy Frazer has asked RedBird IMI to keep her updated on the progress of the sale, including during the election campaign.

Additional reporting by Anna Gross in London

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