Who owns the Telegraph, one of the UK’s most famous newspapers, is the subject of a bitter fight. The answer may not be clear for months.

This limbo is not how any of the parties wanted it to be. The Barclay family want to keep the conservative paper and sister titles they’ve owned for 19 years; their lender, Lloyds Banking Group Plc, seized them in June over £1.2 billion ($1.5 billion) of unpaid debts but wants a smooth and low-key sale; rivals including hedge fund moguls Paul Marshall and Ken Griffin, plus British media baron Jonathan Harmsworth, are also vying for control.

An auction for the paper along with the Sunday Telegraph and the Spectator magazine was suspended this week as the Barclays attempt to regain the assets with Middle Eastern financial backing — though the British government has warned it may weigh in on this bid. Meanwhile, some involved in the process have complained Lloyds is putting profits ahead of the ethics of media ownership.

The stakes are high, according to Jane Martinson, a lecturer at City, University of London and author of a book about the Barclay family. “It is about power and influence,” Martinson said.

That is particularly relevant now, Martinson said, given the election due within a year that polls suggest the opposition Labour Party will win. “Whoever is given the house Bible of the Conservative party will have a big say in who the next leader of the party might be,” Martinson said.

Government Concerns

The Telegraph has been through several changes of ownership since its founding in 1855, though its links to the British establishment and particularly the Conservative party are long entrenched — earning it the nickname of the Torygraph.

Winston Churchill and Boris Johnson are among the leaders to have written for its pages, and the latter also spent six years editing the Spectator, which claims to be the oldest surviving weekly magazine in the world with a history going back to 1828.

More recently, James Forsyth’s jump from political editor of the Spectator to senior adviser to Prime Minister Rishi Sunak highlights the well-trod path between the Conservative party and its perhaps most supportive corner in the UK media.

Now, the most recent owners are offering to repay their debt to Lloyds using money from investors including Sheikh Mansour Bin Zayed Al Nahyan, a member of the Abu Dhabi royal family and owner of Manchester City football club in the UK.

About £600 million would be secured against the media titles, whose ownership would then transfer to Redbird IMI, a media investment vehicle backed by Sheikh Mansour’s International Media Investments and headed by former CNN boss Jeff Zucker.

The remaining £600 million would refinance the Barclays’s other assets, including the online retailer Very Group.

Media Risks

Lucy Frazer, the culture secretary, has highlighted the potential risks to media freedom from a sale and said this week she may issue a Public Interest Intervention Notice, triggering more scrutiny from regulators. Her focus is the deal proposed by the Barclays which – after weeks of shifting fortunes – has moved into pole position.

Other members of the government, including Business Secretary Kemi Badenoch and Security Minister Tom Tugendhat, have raised worries about the potential foreign ownership of the politically influential titles.

While concerns about the Telegraph being controlled by a foreign state with questionable human rights record may be genuine, ministers and lawmakers are also determined to keep the editorial line of the paper favourable to their party.

Many Tories know and like rival bidders Marshall and Harmsworth, agree with their politics, and would like to see the titles end up in their hands. Zucker and Mansour are less predictable. Much of the criticism of the RedBird IMI bid has to be viewed through that prism, people involved in the deal said.

Frazer could intervene on behalf of the government in the coming days, kicking off weeks or potentially months of work at media regulator Ofcom and the Competition and Markets Authority, according to people close to the matter.

It comes at a tricky time for Sunak, who’s preparing to host Middle Eastern investors at the UK’s investment summit on Monday, and will also travel to the United Nations climate summit hosted by the United Arab Emirates, which starts at the end of next week.

Sunak’s office didn’t deny reports — including in the pages of the Telegraph — that the Foreign Office intervened to soften language used by Frazer in her letter when asked on Friday.

It’s “standard practice for the Foreign Office to provide advice to other government departments, but to be very clear this matter and decision is solely one for the culture secretary,” Sunak’s spokesperson Camilla Marshall told reporters.

Independent Voice

Chris Evans, editor of the Daily Telegraph, acknowledged the uncertainty in a message to staff on Monday. “You’ve been asking me how we can be confident that editorial independence would be protected. At the moment I know no more than you will have read,” he said. The Telegraph has also published an article highlighting the importance of retaining its editorial independence.

Redbird IMI has said it shares that view. The entity is “entirely committed to maintaining the existing editorial team of the Telegraph and Spectator” and believes “editorial independence for these titles is essential to protecting their reputation and credibility,” according to a statement.

It also expects government scrutiny. “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,” it said.

Currently, it’s unclear how extensive any government intervention will be. Frazer could issue a PIIN over the whole offer, including the Barclays’s debt repayment as well as the titles going to Redbird IMI, or just the second stage of the change of ownership.

Possible Windfall

Lloyds has been assessing the finances of the Barclay offer. It is pressing the government to allow the repayment and has offered to keep an independent board in place during any probe the government announce, according to Sky News.

If the bank prevails, it would receive a £1 billion-plus windfall as it has already written off the value for the loan — all while fulfilling its fiduciary duty to raise the most it can for its shareholders, and to allow a debt to be repaid if possible.

For Redbird IMI, it is a gamble. If the government decides it cannot own the titles, it could end up as the lender to the Barclays, who would then be back in charge. Another scenario could be yet more uncertainty – as the government scrutinizes the situation, the family could be owners again, but lack the clear authority to set the direction.

Auction Paused

Meanwhile, the paused auction could be resumed, with speculation that the titles could reach about £500 million to £600 million. As well as Marshall and Harmsworth, interested parties include National World, the newspaper group led by David Montgomery, the former Mirror Group chief executive. Rupert Murdoch’s News UK has also registered interest, according to several reports.

Those contenders too could face government scrutiny. Harmsworth, whose Daily Mail & General Trust publishes the Metro and I newspapers as well as the Mail titles plus MailOnline, may face competition concerns.

Speaking a week ago to the Times, Harmsworth said he had rejected working with a Middle Eastern investor, and adhered to the “very simple” principal of editorial independence, while arguing the competitive landscape had fundamentally changed with print sales plunging. News UK — owner of the Times — could also be scrutinized over competition.

Marshall, co-founder and chairman of hedge fund Marshall Wace, also has ties to GB News and founded UnHerd, an opinion site also linked with the right, which puts him similarly in the frame for a public-interest intervention.

The drama is set to heat up further. Lloyds and the Barclays camp are working for repayment of the debt by Dec. 1, while the auction could restart days later if that falls through. Goldman Sachs Group Inc. is running the auction while Lazard is advising Lloyds.

All of their plans could be blown off course by government action.

In the meantime, the fighting continues. In comments that illustrate why people might want to own newspapers, Redbird IMI’s Zucker told the Financial Times on Friday that rivals were “slinging mud and throwing darts” through the media outlets they own.

Author: Katherine Griffiths, Ellen Milligan, Alex Wickham and Thomas Seal