Jeff Zucker and Abu Dhabi Make an Audacious Play for Conservative News in US, UK

An Abu Dhabi fund controlled by a crown prince has paid $1.4 billion to acquire two venerable British publications while their CEO — former CNN boss Jeff Zucker — is facing an uphill battle as the U.K scrutinizes the deal over national security fears.

Zucker, who currently leads RedBird IMI, the investment firm, faces all manner of difficulty in acquiring the conservative daily The Telegraph and the distinguished political weekly magazine The Spectator, not least of which involves a British government inquiry, a national security investigation and pushback from newspaper staff and domestic politicians.

And the U.K.’s Cabinet Office, which scrutinizes deals that could harm the country’s national security, has now joined the probe.

On top of that Zucker faces a daunting media landscape in the United States where established British-based publications like The Guardian have faced challenges, and the news industry has seen contraction and serial layoffs.

The U.K. government investigation could take considerably longer than RedBird IMI is anticipating — around four months — putting more pressure on the deal, media analyst David Clinch, the co-founder of Media Growth Partners, told TheWrap.

“The British government announced it is putting a specific investigative process into exactly where that money is coming from and why,” said Clinch.

He added it would be challenging for Zucker and his Abu Dhabi backers. “I personally don’t think that there is a brand awareness in the U.S. for The Telegraph, while Mailonline and The Sun have made huge traction,” Clinch said.

But Zucker, who resigned as president of CNN Worldwide in February of 2022, would relish the challenge of expanding a more than 150-year-old U.K. brand into a larger conservative platform in the U.S. to rival other right-leaning media outlets like The Wall Street Journal and the New York Post, according to media analysts.

A spokesperson for Redbird IMI confirmed to TheWrap on Friday that the full $1.4 billion had been wired to Lloyds Bank in the U.K. as the first step in the purchase process for the troubled publications.

Under the terms of The Telegraph and Spectator deal, RedBird IMI – which is 75% owned by UAE deputy prime minister Sheikh Mansour bin Zayed Al Nahyan, an Emirati royal – paid the current owners, the Barclay family, $750 million for the rights to The Telegraph and The Spectator, avoiding an auction.

The other half of the Barclays’ $1.4 billion debt to The Lloyds Banking Group – which put the publications into receivership last summer – was paid on Friday in a loan from Sheikh Mansour, who also owns Manchester City Football Club and UAE media investment vehicle IMI.

RedBird IMI is a joint venture between the U.S.-based private equity firm RedBird Capital Partners and Sheikh Mansour’s IMI and is focused on building companies in media, entertainment and sports, with Zucker as its CEO.

Unlike the United States, the U.K. does not have a specific law that bars foreign ownership of media. Each deal must be scrutinized by competition regulators and the UK government.

Zucker’s offer, announced a week ago, was swiftly followed by backlash from British lawmakers, Telegraph staffers and conservative politicians, who expressed outrage over how ownership by a Gulf state could compromise the integrity of the media outlets. Then British Culture Secretary Lucy Frazer ordered a probe into the sale.

“Many people internally are very wary of the new ownership, worried that reporters might not be able to cover stories about the region without interference,” a longtime Telegraph staffer told TheWrap. “The staff will be asking for assurances they can do their jobs.”

The venerable Telegraph columnist, Lord Charles Moore, who has previously edited both the titles on sale, as well as the Sunday Telegraph, said that a purchase by Abu Dhabi would be dangerous. Writing in The Telegraph on Nov. 24, he said: “The Telegraph and the Spectator are great British institutions. They should not be controlled by a foreign power.”

He warned that Abu Dhabi’s friendly relations with China, which fears freedom of the press “in all its forms,” could lead to closure of one or more of the publications “if it causes trouble.”

In an opinion piece in the newspaper on Dec. 1 titled, “A misogynist foreign state must not be allowed to own The Telegraph,” the Telegraph’s Camilla Tominey similarly wrote that a newspaper sold to a Gulf state would face questions surrounding freedom of expression. “It doesn’t pass the sniff test because many believe – correctly in my view – that the UAE falls short of Western standards and values,” Tominey said.

“But as a woman, I am even more deeply concerned about the potential for this newspaper to be owned by a sexist regime.”

Another newspaper owned by Sheikh Mansour, the Abu Dhabi-based The National, launched in 2008, was initially led by Martin Newland, a former Telegraph editor, who took with him many of the paper’s employees and some prominent US journalists.

It was intended to be “The New York Times of the Middle East” but then saw many of its original staff quit over disputes about editorial independence. In 2012, the former foreign desk editor Tom O’Hara told The American Journalism Review that the newspaper had a “meticulous censorship process” including suppression of unflattering stories about the UAE royal family and government, plus no mentions of gay rights and feminist agenda.

“That debacle hasn’t been forgotten in The Telegraph newsroom,” the staffer told TheWrap.

The Telegraph has kept its circulation figures private since 2020. In December 2019, the last month for which data is available, the daily circulation for The Telegraph was 317,817, according to the UK Press Gazette.

The Telegraph went behind a paywall in 2016. It most recently reported a total of 733,731 subscriptions across print and digital in December 2022, the UK Press Gazette added. The Telegraph reported earnings of nearly £30 million ($38 million) last year. Those figures do not suggest a value anywhere close to the $1.4 billion paid by the fund.

There has been other speculation in the U.K. that Zucker’s plan for The Telegraph may be digital-forward and the print edition of the newspaper would eventually cease to exist.

“That would be a seismic disaster,” the staffer added, “For many readers and conservative politicians in England who read it while eating their morning toast, it would feel like the end of the world.”

It is likely that during the U.K inquiry to the sale, Zucker and his team would be asked for assurances that the print edition of the broadsheet be continued.

But a RedBird insider told TheWrap of the rumor that Zucker could kill the print edition. “That’s absurd. The Telegraph print edition is a staple of society that needs to be maintained.”

However, the Telegraph staffer added that some journalists “are relieved” to see investment in the newspaper, which in recent years. “has faced death by a thousand cuts. They started making redundancies, and open positions were not being filled.”

Twin brothers David and Frederick Barclay bought the Telegraph Media Group for £665 million ($830 million)  in 2004. Lloyds Bank took on their loans after buying Halifax Bank of Scotland during the 2008 financial crisis. The debt consisted of a £700m loan plus £400m of interest, The Telegraph reported on Dec. 4.

The Telegraph currently has bureaus in Washington D.C and New York staffed by a small number of journalists.

“It seems like a smart move on Zucker’s part to pick up intelligent readers who are disillusioned with the left leaning stance of the New York Times,” the staffer added.

Zucker’s newspaper adventure

Zucker, the former NBCUniversal executive who famously gave Donald Trump his first big platform on “The Apprentice,” most recently served as president of CNN Worldwide from 2013 to 2022, when he resigned after revealing a consensual relationship with a colleague.

He has never run a newspaper, apart from at Harvard, when he was president of the school newspaper, The Harvard Crimson, during his senior year.

The former CNN chief said in a Nov. 28 interview with The Telegraph that he wishes to build the newspaper and The Spectator’s presence in the U.S. where he believes there is a market “for a true center-right media outlet.”

However, this comes at a fiercely competitive time. The UK’s Times is muscling up its New York bureau, while Mailonline is a well-established media brand and plans on charging for some content early next year.

The Messenger, owned by Jimmy Finkelstein, launched earlier this year with the intent to appeal to a center-right audience. Meanwhile, the U.K.-based and left-leaning The Guardian is now expanding its New York and D.C. offices and hiring investigative journalists

Zucker has pushed back on critics of the deal, vowing to the Telegraph that he would “resign” if he heard of any pressure on editorial from the United Arab Emirates. Plus an independent supervisory board, he said, will ensure editorial independence.

“I understand why people have raised questions,” he said in the interview on Nov. 28 with The Telegraph. “All I can say is, they’re misplaced. I am here to say that the editorial independence of The Telegraph is guaranteed.”

He added that he will lead the publications without the influence of Abu Dhabi rulers. “This is me. This is not IMI or Abu Dhabi,” Zucker told The Telegraph. “In fact, the legal document that formed this joint venture says that IMI in no way has anything to do with the running of any of our investments. They are there at the entrance making the investment and at the exit.”

He has also said he would only manage the business and not oversee day-to-day editorial operations.

Friends of Zucker believe he can make it work. One told TheWrap that he plans to turn The Telegraph and Spectator into global brands.

“Handling editorial in newspapers is very different to editorial in video and TV,” the Zucker friend said. “At CNN he was much of a global guy, let’s make this our top story, he wasn’t dictating the editorial, and he won’t be doing that at The Telegraph.”

He’s also got support from big players in the media industry. “If there’s somebody that can take these entities out of bankruptcy, put them on steroids and make them grow, it is Jeff Zucker,” Jay Sures, co-chairman of United Talent Agency, told TheWrap.

News of the deal has nevertheless angered some British Members of Parliament, with 18 Conservative MPs warning ministers that it “represents a very real potential national security threat.”

Lord William Hague, a former leader of the Conservative party, said during his time as Foreign Secretary that a senior UAE official had once asked him to interfere with critical BBC reporting on the region.

“That is why the prospect of important British media institutions, the Telegraph newspapers and The Spectator, falling into the ownership of Sheikh Mansour of the UAE is disturbing and should be prevented,” he wrote on Nov. 27 in The Telegraph’s competitor, The Times.

UK inquiry into bid expected to take months

Last Thursday, British Culture Secretary Lucy Frazer announced she had ordered a probe into the sale due to public interest concerns about foreign investment.

The country’s Competition Markets Authority and powerful media regulator Ofcom will examine the deal looking at “the need for accurate presentation of news and free expression of opinion in newspapers.”

Both have been asked to report back to Frazer by Jan. 26, but the probe is expected to go on for months longer.

The U.K’s foreign office has also become involved, according to sources, because the department monitors foreign investment in the country.

Sources told TheWrap that the UK Cabinet Office is also investigating the deal under the National Security and Investment (NSI) Act, which allows the government to screen investments and manage risks to national security.

While the watchdogs investigate, Zucker and his team are not able to take control of the publications. The British government or the independent directors appointed by Lloyds could block the deal should the regulators rule against it.

The Barclay family and RedBird IMI are also prevented from making further changes of ownership, removing directors or transferring top editorial staff without British government approval during the investigation.

Meanwhile rival bidders including GB News investor Sir Paul Marshall, Daily Mail owner Lord Rothermere, and National World chairman David Montgomery are still jostling in the wings and are expected to give evidence during the probe against RedBird IMI to block the deal.

Despite the headwinds, Zucker is positive he will prevail. “RedBird and IMI and Jeff are very confident they will make a strong case to the regulators and the deal will go through,” said a source close to RedBird IMI’s Telegraph deal.

Representatives for RedBird IMI and Zucker declined to comment on the inquiry. Requests for comment from Sheikh Mansour were not returned.

The post Jeff Zucker and Abu Dhabi Make an Audacious Play for Conservative News in US, UK appeared first on TheWrap.