Daily Mail and General Trust has secured £400m to back its bid for the Daily Telegraph. The funding consists of cash, an existing overdraft provision, and a substantial new loan from DMGT’s long-term banker, NatWest.
Tomorrow, RedBird Capital will inform Lisa Nandy, the secretary of state for culture, that the US company wants to transfer its right-to-buy option on the venerable daily to DMGT. After a bruising battle, not least with the Telegraph’s own staff, RedBird is walking away. Lord Rothermere’s company will pay RedBird a further £100m within two years, most likely using a DMGT bond with Deutsche Bank that matures in 2027.
The Telegraph’s ownership will not be resolved until Nandy decides whether to trigger a public interest intervention notice (PIIN) to investigate the deal over share of the news and ad market by the resulting company. The acquisition would bring the Daily Telegraph and Sunday Telegraph under the same umbrella as the Daily Mail, Mail on Sunday, Metro, the i paper and New Scientist.
‘DMGT is right on schedule with its bid, almost guaranteeing clearance by March’
Alice Enders. analyst
Last year, the Daily Mail accounted for 18% of national daily print circulation, but the overall share of audience is hard to estimate. Three news groups – News UK, Guardian Media Group and the Telegraph Media Group (TMG) – no longer report their circulation. But the combined group would control roughly 28% of UK newspaper print advertising revenue, above the 25% share of market required to trigger an investigation.
A PIIN sends the deal to media regulator Ofcom, to examine plurality, and markets regulator the Competition and Markets Authority (CMA), to investigate competition issues. This process takes around 40 working days. Nandy could then trigger a second phase with the CMA but analysts think this unlikely.
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“DMGT is right on schedule with Lisa Nandy’s invitation to lodge a request for regulatory clearance by 15 December,” says Alice Enders at Enders Analysis. “That will almost guarantee clearance by March. Nandy will take comfort that she has a British buyer and a British bank which ensures there is no foreign state involved. Ofcom is pretty sure to be happy with the track record of Lord Rothermere on complete editorial independence of each title. The CMA gave permission in 2021 to TMG to outsource print ad sales to DMGT’s sales house, so they have four years of evidence to go by.”
Assuming the deal is approved, Nandy will lift the pre-emptive order preventing major changes to TMG’s structure, management, or assets without government consent. The Telegraph has been in operational limbo for nearly two and half years, after its parent company was forced into insolvency by Lloyds Banking Group, which ran out of patience with the Barclay family, the newspaper’s long-standing owner.
“It will be good for the UK news industry to have a long-term investor in Lord Rothermere owning TMG, instead of private equity funds imposing a ridiculous 25% internal rate of return over 7-10 years,” Enders adds. Analysts also like the price. If the process fails, Nandy will have to auction the newspaper, which most market valuations put at around £350m. This would devalue other news assets in the UK.
Nandy is keen to move on. On Tuesday, she releases the green paper on the BBC Charter review. This is understood to be wide-ranging, looking at de-politicising the BBC board and chair, ensuring the broadcaster invests more in regional production and independent production companies, and acts as a reliable source of knowledge in the fake news age.
RedBird can turn its attention to another media takeover attempt, ironically involving foreign media ownership. The company is backing Paramount Skydance’s $108.4bn hostile bid for Warner Bros Discovery. SEC filings show Paramount failed initially to disclose that its bid is heavily backed by the sovereign funds of Saudi Arabia, Abu Dhabi and Qatar. These will contribute $24bn, nearly three-fifths of the $40.7bn in equity.
FCC ownership rules prevent foreign investors owning 20% of broadcast or telecoms licensees like CBS and CNN. The wealth funds have agreed to forgo governance rights, including board representation, which Paramount Skydance CEO David Ellison claims places the deal outside those rules.
Photograph by Getty; Alamy