Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) (No. 2) Regulations 2025
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Baroness Twycross
That the draft Regulations laid before the House on 30 October be approved.
Relevant document: 41st Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)
My Lords, the foreign state influence regime is designed to prevent foreign states controlling, influencing or owning our newspapers and news magazines. It is essential that we safeguard our free press and a pluralistic media landscape for the sake of our democracy. Newspapers remain a vital trusted news source. The Ofcom survey News Consumption in the UK: 2025 reported that 73% of regular news users consider newspapers trustworthy, which is more than any other media.
However, noble Lords are aware of the considerable challenges faced by the news media industry. Newspapers require investment to grow and thrive. Balancing this need for investment with protecting news from the influence of a foreign state is at the heart of the foreign state influence regime. This is what underpinned the three statutory instruments that we made in July. We made regulations to amend the foreign state influence regime to allow 15% of shares or voting rights in a newspaper or news magazine to be held by a state-owned investor provided that they are investors with no right or ability to control, direct or influence the newspaper’s policies. The 15% threshold is below the level where the Competition and Markets Authority typically considers that material influence may arise.
The foreign state influence regime, rightly, has a low bar for intervention. The Secretary of State is given no discretion. She must intervene if she has reasonable grounds for suspecting that a foreign power may hold the ability to influence or control the policy of a UK newspaper enterprise as a result of a merger. This is regardless of whether there is an intention to influence. When we introduced the previous regulations earlier in the year, colleagues in your Lordships’ House and the other place challenged us on whether they had the unintended consequence of permitting multiple foreign powers, investing through state-owned investment vehicles, to each invest 15%. The argument was made that it would be possible for the majority of a newspaper enterprise to be owned by state-owned investors, albeit passively.
We were clear that this is a remote risk. However, we understood the concerns of your Lordships’ House. The Government committed to bring forward an additional statutory instrument to put the matter beyond doubt. That is why we are here today, following our consultation in the summer and the response published on 30 October. I take this opportunity to thank the noble Baroness, Lady Stowell of Beeston, for her invaluable engagement on this matter. I recognise the excellent role that your Lordships’ House so regularly plays in scrutinising and improving legislation.
Noble Lords may find it helpful for me to set out the detailed effect of these regulations. First, the regulations ensure that a 15% cap applies to the percentage of shares or voting rights that may be held in a newspaper by state-owned investors acting on behalf of foreign powers. This means that we are now putting it in statute that multiple state-owned investors, acting on behalf of different states, will not be able each to hold up to 15% in one newspaper. The 15% cap will apply to the combined total of direct and indirect holdings of shares or voting rights. We are introducing a specific and narrow exception for stakes of 5% or below in quoted companies. The exception affects the calculation of whether the 15% cap has been reached in cases where multiple state-owned investors from different countries or territories all have investments in the same newspaper. The exception catches only small shareholdings, and its purpose is to avoid a chilling effect on investment.
Secondly, we are using this opportunity to impose new transparency requirements on state-owned investors that invest in UK newspapers and news magazines. If a state-owned investor acquires a direct holding of more than 5% in a newspaper, they must notify the Secretary of State within 14 days of the relevant transaction being made. State-owned investors which are required to notify the Secretary of State must also publish these details within the same timeframe. This will enable the Secretary of State to report to Parliament on a regular basis—we intend for this to be every six months—on the published details of these acquisitions. This will benefit public and parliamentary confidence by increasing transparency around state-owned investment in newspapers.
If a state-owned investor which acquires a direct holding of more than 5% of shares or voting rights fails to comply with the notification and publication requirements, the transaction will be a foreign state newspaper merger situation, and the Secretary of State will be under a duty to issue a foreign state intervention notice and refer the case to the Competition and Markets Authority.
I want to reassure noble Lords about the nature of the 5% quoted company exception. It applies only to a limited type of investment by state-owned investors, as defined in the legislation. Additionally, the intention behind it is to avoid state-owned investors having to take account of holdings by state-owned investors from other countries, which newspaper groups are unable to track. Holdings in companies with publicly traded shares are disclosable only if they cross certain thresholds. These thresholds differ in different markets, but 5% is a common benchmark. If crossed, the investor must declare the interest to the company and the wider market.
The provision prevents the regulations having a chilling effect on investment. It removes the need for state-owned investors to establish whether state-owned investors from other countries have existing undisclosed or small investments in the same newspaper, which would affect whether their intended investment would or could exceed the 15% cap. Ultimately, these regulations address what the Government believe is a remote risk that multiple state-owned investors from different states could each invest 15% in a single newspaper. This cements the measures that can be taken against foreign state influence in UK newspapers and news magazines. These regulations also further improve transparency around investment, thereby helping to protect a thriving plural press essential to our democracy. I hope your Lordships’ House will support these important steps.
Baroness Stowell of Beeston (Con)
My Lords, as this is the Minister’s second statutory instrument debate today, I commend her stamina, and indeed I commend my noble friend on my own Front Bench for his, too. I welcome this statutory instrument, which meets the commitment that the Minister gave in July to close what was a gaping regulatory loophole that would have allowed multiple foreign states each to own up to 15% of a British newspaper, with all the risks that flow from that. I am also grateful to the Secondary Legislation Scrutiny Committee for its thorough examination and report on these No. 2 regulations. I am also pleased that the Government Chief Whip scheduled this debate on the Floor of the House and not in the Moses Room.
Of course, all of us could have been spared this additional work if the Government had done what I and others advised some months ago, once the so-called “multiples loophole” was spotted, and that was to withdraw, amend and lay a consolidated set of regulations, rather than us having to handle this piecemeal approach. I am not going to get sidetracked, but, as I have said before, the Government’s unwillingness to take the straightforward route raises questions about who or what has been prioritised when dealing with this matter. However, we are where we are, as they say, and I am pleased that these regulations now ensure that the 15% limit for investment from state-owned investment funds is a single aggregate cap.
Since it became apparent two years ago that our legal framework could not prevent foreign Governments owning, controlling or influencing British newspapers and news magazines, it has been clear that the future of our free press is not just about protecting editorial independence; it is also about ensuring financial sustainability. The pace of technological change and the economic challenges facing the news industry continue to worsen, making investment urgent and consolidation within the industry increasingly likely. So, while I respect those who maintain their position that, even as an aggregate at 15%, the cap has been set too high, my view, as I said in July, is that, restricted to passive investment only and with additional reporting safeguards, which I will come on to in a minute, an aggregate 15% cap for state-owned investors is acceptable and still supports the principle of press freedom.
That said, the Government’s decision to tackle this in a piecemeal way means that these regulations are not the easiest to follow, so I am grateful to the excellent senior DCMS officials for their patience in responding to my questions seeking clarification over the past few weeks, and I am also grateful for the Minister’s explanation of these regulations in her opening remarks. Other noble Lords may still have questions about how the cap works, with the carve-out for small holdings of 5% and below for listed media companies, but I am satisfied that what is proposed is a reasonable approach. Indeed, I am conscious that we must not make this regime even more complex and that doing so could deter legitimate investment or prevent our news industry accessing much-needed investment capital.
Lord Fox (LD)
My Lords, where we are now is, I think, not where the Minister expected to be when the previous statutory instrument was introduced. So how did we get to this point? With great haste, and I would say possibly fuelled by intense pressure from beyond these shores, the Government tabled the secondary legislation that, as we have heard, allowed an unlimited number of 15% stakes to be taken by funds that, to all intents and purposes, have an element of control by foreign Governments—the FOCIs. Then, in late July, when I tabled a fatal Motion, the Minister agreed at least to deal with the multiple-stake issue, which is what we have here.
I pay tribute to the noble Baroness, Lady Stowell, who managed to explain to me the convoluted nature of this SI, having herself presumably had some coaching from the department. It is clear that this is not an easy piece of statutory legislation and her suggestion regarding future changes to the Enterprise Act is something that I do think the Government should consider.
Although the Minister agreed to deal with the multiple-stake issue, she did not agree with the strong yet minority view of the House that even one 15% stake was one too many. That is because, at the time, in my view, this regulation was designed to achieve just one thing: the sale of the Telegraph Media Group to RedBird IMI, which of course included the 15% stake from Abu Dhabi. This is moving into the realms of a dangerous dogs Bill approach to legislation, but actually it is bespoke regulation for a discerning billionaire.
Just as that flawed SI had been rushed through, the RedBird bid backed out, leaving us today with handmade regulation but no obvious client. Had the Conservative Party, with obvious honourable exceptions, not backed the Government and voted through the last SI, I would have suggested that we do not need this one at all. But this at least deals with the multiple-stake issue while, in my view, leaving the substantive elephant in the room.
The other pachyderm lurking behind this statutory instrument is, as the noble Baroness broached, the future of the Telegraph Media Group. As your Lordships will be well aware, and as was outlined, the Daily Mail and General Trust group has tabled an offer of £500 million to acquire it, and this has apparently been agreed by RedBird, with detailed negotiations proceeding.
I do not expect the Minister to offer judgment as to whether this should succeed, as she will correctly cite quasi-judicial qualms in this area. What I would welcome is an overview of process going forward and some element of timescales. As I am not a quasi-judge, I am happy to offer your Lordships some thoughts and point to some key issues that I hope the Minister will be able to elaborate on.
First—and here I very much agree with the noble Baroness, Lady Stowell—the continued involvement of Redbird IMI in the sale process is almost certainly counter to the long-term interests of the Telegraph and its readers. This situation means that the UAE, through the back door, is currently deciding who will own the Telegraph in the future. Will the Minister give assurances that there will be full transparency, if a deal is done, on the funding and structure of any deal?
Again as the noble Baroness has pointed out, the Secretary of State has given the Mail group a very short time to demonstrate that it can go through with this acquisition. Can the Minister outline what steps the Secretary of State will take to ensure the timely sale of the Telegraph in the public interest, should the deal not be ready by the deadline in the Secretary of State’s Statement of 24 November, or should the proposed deal fail the tests also contained in that Statement?
Secondly, there are not many modern precedents, but the Murdoch acquisition of the Times newspaper is perhaps a helpful example. Until the intervention of Nadine Dorries in 2022, the Times and the Sunday Times had been subject to legally required independent directors on their parent company’s board, following Rupert Murdoch’s News International acquiring them in 1981, specifically to safeguard editorial independence after the takeover. These arrangements created, and later updated, an independent board that approved key editorial appointments and was designed to prevent undue interference. I am sure this was far from a perfect solution, and I am also sure that Lord Rothermere is a different sort of owner from Mr Murdoch, but I ask the Minister to take this on board as an option going forward, should the Daily Mail group bid succeed.
Thirdly, the public interest on plurality grounds needs to be assessed, particularly given that both the Telegraph and the Daily Mail occupy similar political spaces. This almost certainly creates a concentration of ownership. Ofcom is the place to make this determination, and this bid should be referred accordingly. I would welcome the Minister’s general response on these three points.
This is secondary legislation that seeks to correct an earlier piece of misdrafted secondary legislation—regulation that we do not now need and that many of us did not want in the first place. It is a living example of how the folly of pandering to specific interests that are themselves mercurial and subject to summary change based on self-interest is the wrong way to legislate.
Lord Parkinson of Whitley Bay (Con)
My Lords, I am grateful to the Minister, who opened this, the second part of our foreign investment regulatory double bill, this evening. I thank her for the remarks she made in outlining these regulations.
Like other noble Lords who have spoken, I broadly welcome these regulations, to which the Government committed when we were discussing the No. 1 set of regulations before the Summer Recess. We are here today thanks to careful scrutiny, not least by my noble friend Lady Stowell of Beeston, who should be congratulated on helping us get to this point. As she says, we could perhaps have got here through a different route and rather more elegantly, but I am glad that she welcomes the closing of the loophole that she and others identified when we looked at the previous set of regulations earlier this year.
Unlike the guidance on football governance, which we were discussing earlier, these regulations have been drawn to the special attention of the House by your Lordships’ Secondary Legislation Scrutiny Committee. Like others, I thank the members of that committee for their careful consideration and for the report that draws our attention to the points that they have raised.
The most serious question the committee raises concerns the 5% carve-out, as we have heard. It quotes the correspondence it has had with the noble Baroness’s department, about that carve-out and the way it will be used. DCMS said:
“Our judgement is that the possibility of the carve out being misused is remote”.
Lord Young of Acton (Con)
My Lords, I declare an interest as a Telegraph contributor and as the director of the Free Speech Union, which defends freedom of the press among other freedoms.
First, I thank the Secretary of State for bringing forward these regulations. I was one of around 50 Peers to write to her pointing to the shortcomings of the first set of regulations, which we have already heard quite a bit about, whereby it was not clear whether the 15% ceiling on the percentage of shares in a British newspaper a foreign state could own applied to those states both individually and collectively or just individually, leaving open the possibility that a number of foreign states could each take a 15% stake and collectively end up with a controlling stake.
In our letter, we urged the Secretary of State to bring forward a second set of regulations making it clear that the ceiling applied to foreign states individually and collectively, so I am grateful that the Secretary of State has done so, although a good deal of the credit for the closure of this loophole should go to my noble friend Lady Stowell.
The Telegraph group has now been in a state of “protracted uncertainty”—those are the Secretary of State’s words—for nearly two years. In that period, senior executives and senior members of the editorial staff have been unable to make strategic decisions, which they need to do given the profound upheaval in the newspaper business caused by AI. It is vital that the group is sold to a reputable owner as quickly as possible so that it can adapt to the rapidly changing business environment and attract the investment it urgently needs to grow.
In order to end the prolonged period of uncertainty, I share my noble friend Lady Stowell’s hope that the bid by the Daily Mail and General Trust is successful. As I understand it, the Secretary of State has given DMGT until Monday week to submit a bid and she is then at liberty to approve the sale, provided no flags are raised by the Competition and Markets Authority or Ofcom. Alternatively, she can refer the bid to the CMA. Should that prove necessary, I urge her to impress upon the regulator how important it is to complete its scrutiny process as quickly as possible and make a decision about whether to approve or reject the bid.
Should DMGT’s bid be rejected and it becomes necessary to invite other bidders to submit offers, it would be highly improper if RedBird IMI is still the entity holding the gavel, as it were. The reason it is selling the Telegraph group is because the United Arab Emirates owns a controlling stake in the company. If it is a breach of the regulations for a company that is controlled by a foreign state to own a British newspaper, how can it be appropriate for a company controlled by a foreign state to decide who to sell a British newspaper to?
I am not alone in being prepared to overlook this anomaly in the current circumstances, given the need for an expedited sale. But should DMGT’s bid prove unsuccessful, or if it fails to materialise, the course of action the Secretary of State must take is clear. I share my noble friend Lady Stowell’s disappointment that the Secretary of State did not set out what she would do in the event of DMGT’s bid not materialising, or it being rejected, in her Written Ministerial Statement at the beginning of last week.
To my mind, the Secretary of State’s course of conduct is clear. She must immediately refer RedBird IMI’s ownership of the Telegraph group to the CMA. The CMA will, I imagine, quickly declare that the arrangements fall foul of the foreign state influence regulations, as it must, and it should then use its powers to order the independent directors of the Telegraph group to hold an auction with no floor price in which the bidders are transparent about the origin of the money they have raised for the acquisition.
Those last two points are crucial. Should RedBird IMI retain its grip on the gavel, not only would that be improper but it will be reluctant to accept bids of less than £500 million, given that is how much it paid. In the light of the tumult unleashed in the newspaper business by AI in the past two years, not to mention higher interest rates, economic tariffs and a soft ad market, few if any bidders, with the possible exception of DMGT, will be willing to meet that price. To insist on a reserve price of £500 million might very well condemn the Telegraph to remain in limbo for the foreseeable future, with disastrous consequences. Should the bidders not be transparent about the financing of the deal, there is a risk the new owners will also fall foul of the regulations and we will be back here again. Rinse, wash, repeat—meanwhile, a great British newspaper shrinks and shrinks until it becomes invisible.
In short, if the DMGT bid is viable, the Secretary of State must use her powers to ensure the deal is completed as quickly as possible. If it is not, she needs to move equally quickly to a transparent auction process overseen by the company’s independent directors. To govern is to decide, and the Secretary of State must start making some decisions.
Lord Moore of Etchingham (Non-Afl)
I do not want to detain your Lordships’ House, and the speeches already made by several noble Lords are very much to the point. I should declare an interest as a long-serving employee of the Daily Telegraph. In that capacity, I draw the attention of the Minister to what it is like for a newspaper not to know who is owning it for such a very long time.
It seems to me that the greatest power of bureaucracy is delay, which increases the power of bureaucracy with every moment; that is its appalling leverage on everything else. But business, and particularly journalism, has the opposite desire. It needs to get on, and the word “journalism”, of course, comes from the French word for day. It happens every day, and every day lost is a disaster for us. In certain respects, we have been losing day after day—we have lost roughly half the length of the Second World War not knowing who is really going to own us.
I make no distinction really here between Governments of either party because both, it seems to me, were guilty of a similar failure. I draw the Minister’s attention to the fact that there is a strong contrast between the quasi-judicial role that DCMS quite rightly operates, which is necessary in these cases, and all the manoeuvring and use of time and delay to try to satisfy—as the noble Lords, Lord Fox and Lord Young, have pointed out—the needs of a foreign state that the British Government seem to be overzealously courting.
This is a very bad piece of politics—not party politics—and it puts us all in play. If we were to write the history of this, we would have to see that it fell to the journalists of the Daily Telegraph twice to start making a noise before anything could prevent very bad things happening. That seems to be nothing to do with the quasi-judicial process. I hope that the very sharp deadline of 15 December is tacit acknowledgement by the Government of the damage done by delay and that therefore something more drastic is being done now.
In another place, the Justice Secretary, when trying to do something about jury trials, has made the point that justice delayed is justice denied. We at the Telegraph have had justice delayed for a very long time and therefore denied. The noble Baroness, Lady Stowell, and other noble Lords have been clear that it has to be acknowledged that a process of this sort should never go on again and that there is a big lesson here. If, for whatever reason, the Daily Mail bid fails or gets called into question, there has to be an open, swift and fair process.
Baroness Twycross (Lab)
My Lords, this has been an important and useful debate, and I am very grateful to all noble Lords who have contributed to it. I am particularly grateful to the noble Baroness, Lady Stowell of Beeston, for her engagement over many months with DCMS. I think we have a better position as a result of her engagement and persistence on this matter, and I know that the Secretary of State is also grateful for the time she has taken to help us refine this, frustrating as it must have been for the noble Baroness at times.
This regime is about safeguarding a specific industry that has a unique, essential role in the health of our democracy. The noble Lord, Lord Parkinson, made it really clear that this is important for democracy, and I think that is beyond doubt in your Lordships’ House. I need to put on the record that I do not recognise the scenario outlined by the noble Lords, Lord Fox and Lord Moore of Etchingham, of the genesis of these SIs, but I hope all noble Lords feel that we have listened to and addressed concerns raised in your Lordships’ House and have got to a better place as a result.
I will address the points made by noble Lords during the debate. The noble Lord, Lord Parkinson, raised concerns about the 5% exception’s potential for misuse. I stress that this is a narrow exception, applying in limited circumstances. It intends to remove any potential chilling effect by providing that a state-owned investor, or SOI, from one country or territory may ignore smaller holdings that are in effect too small to confer influence in their own right in quoted companies by SOIs from other countries that are not visible to them.
A hypothetical example of the limited circumstances in which the carve-out is in our view necessary to avoid a chilling effect is that if a state-owned investor wanted to invest 15% in a publicly listed newspaper owner they would have to be sure that no other state-owned investors from any other states or territories already held shares in the same newspaper owner. Without the carve-out, they could potentially not be sure that their 15% investment would comply with the limit.