A rival suitor for The Telegraph is considering legal action against the UK Government after ministers allowed the owner of the Daily Mail to take a significant step towards completing its £500 million takeover of the newspaper group.
The Telegraph titles, including the daily and Sunday editions, have been in limbo for three years after the Barclay family lost control amid substantial unpaid debts.
Last week, Culture Secretary Lisa Nandy lifted restrictions that had prevented Daily Mail and General Trust (DMGT), controlled by Lord Rothermere, from acquiring an option to buy the Telegraph.
Securing that option would represent a major step in DMGT’s attempt to take control of the titles. The option is currently held by RedBird IMI, the Abu Dhabi-backed venture that was required to sell the Telegraph after changes in UK law limiting overseas state ownership of newspaper groups.
However, figures involved in a competing bid led by Dovid Efune, the British owner of the New York Sun, are understood to be examining the possibility of a judicial review of the Government’s decision.
Sources close to the rival consortium are concerned that allowing the option to be transferred could prejudice the outcome of ongoing regulatory investigations into the proposed sale to Rothermere’s group. Regulators are currently assessing the deal’s impact on media plurality and competition in the UK market.
There is also unease that if Rothermere’s bid were ultimately blocked, holding the option could effectively place DMGT in a position to oversee any future sale, giving it influence over which rival bids might be accepted.
A spokesperson for the consortium declined to comment.
DMGT struck a deal in November to acquire the Telegraph titles, entering a period of exclusivity with RedBird IMI. The reported £500 million price tag was widely seen as high but reflected RedBird IMI’s desire to recoup its investment.
Critics have also raised questions about a corporate restructuring by DMGT last October, when the group transferred its events business to a new offshore parent company, Rothermere Continuation Holdings Ltd. The company has said the reorganisation took place before the Telegraph returned to the market.
DMGT has stated that there will be no state funding involved in its bid. UK laws are designed to prevent overseas states being able “directly or indirectly, to control or influence the policy of UK newspapers”.
Lisa Nandy has reportedly expressed concerns about further consolidation of “right-leaning” titles and the possibility that the Mail and the Telegraph could adopt aligned editorial positions. DMGT has disputed the characterisation of its newspapers as “right wing”, arguing that the term lacks clarity.
The deal will be examined by Ofcom as part of its assessment of media plurality.
Meanwhile, the rival consortium has been strengthened by the involvement of Axel Springer, owner of Politico and Bild, alongside David D Smith and British investor Jeremy Hosking.
Both the Department for Digital, Culture, Media and Sport and DMGT declined to comment.