Will Rishi Sunak backslide on letting ‘foreign powers’ own British magazines and newspapers?

Last week, a rebellion in the House of Lords drew a UK government pledge to ban foreign governments and their proxies from owning British newspapers and magazines. It was a historic moment for the defense of press freedom in the era of acquisitive, well-connected autocracies. It will have global significance. But the devil was always going to lie in the detail, and that will come in the third reading of the Digital Markets Bill due Tuesday.

The risk is that ministers may row back and allow the Emiratis to become part-owners of this magazine and the Telegraph by keeping a low stake of 5 percent or even 1 percent. This would still grant them the ownership status that they seek, albeit on a far-diminished basis.

The is about principles, not percentages. The published text of the amendment says the government must act to prevent “foreign powers from gaining control or influence over newspaper enterprises.” Allowing the Emirati government the status of part-ownership — whether 1 percent or 25 percent — is allowing them to gain influence. This is not explicitly ruled out in the wording and the fuzziness may be deliberate.

Why would the Conservative Party fudge it? There are good reasons: mainly to keep the Emiratis sweet in hope of the £10 billion of investment Abu Dhabi promised — to invest in projects such as the Sizewell C nuclear power station. You can see the temptation for ministers to say “let’s let them keep a small stake in the Daily Telegraph. It’s negligible. They would have no real power and it saves face, and keeps our chance of that cash.”

So the principle of autocratic part-ownership of UK media — which should not be entertained by any self-respecting democracy — may still be allowed, just to keep the Emiratis on board. Control? No, not at 2 percent. But influence? Yes, even at such low levels.

A small stake could still put the Emiratis in the list of top five, even top three, shareholders of a newspaper. It could transform their status from “undemocratic regime allied with Vladimir Putin, to be scrutinized like any other autocracy” to joint owners who may well have the editor on speed dial. It risks sending a chill down the spine of any publication: a young journalist who may (for example) be considering digging in to the deepening Emirati relationship with Putin could think twice. What if this upsets a senior manager? What if this marks you out as a troublemaker? 

Readers, too, would have good reason to be suspicious if foreign governments start part-owning publications. As I recently wrote in my Telegraph column:

My fear about RedBird IMI buying The Spectator was not that we’d turn into an Arab Pravda, but that the magazine would be seen as part of this influence-laundering apparatus. For example, I happen to think Islam is often unfairly maligned in this country and that recent reforms in Saudi Arabia are more impressive than are generally credited. But if I said so, and you know that Emiratis owned my magazine, would you take me seriously? Your suspicions would remain, quite rightly, if the Emirati government owned even 5 percent. That’s why it’s important that Rishi Sunak’s new law does rule out minority shareholdings. 

The Emirati game is not about control but “influence laundering.” This is a post-2008 crash trend whereby cash-rich autocracies seek to build a portfolio of influence by part-ownership, or funneling cash into front organizations. Sheikh Mansour’s IMI was providing 75 percent of the funding for the joint venture with RedBird. Jeff Zucker, ex-CNN and head of RedBird IMI, would be the face of it. That ended up being a bit too obvious. Zucker claimed that IMI was not at all an Emirati government project but a private one that just happened to be run by the deputy prime minister of the UAE. This proved unconvincing.

Baroness Stowell’s amendment — and Robert Jenrick’s proposed rebellion in Parliament — stopped outright RedBird IMI ownership but that was on principle. Thangam Debbonaire, the shadow culture secretary, was speaking on principle when she said that foreign government ownership of newspapers was incompatible with press freedom. Quite evidently, this goes for part-ownership, too. It would give the Emiratis a favor to trade in, or the ability to enter a newspaper’s office with the status of a part-owner.

As Baroness Stowell said in the Lords, it’s important that any new law does not bar the $1.6 trillion (!) government pension fund of Norway, for example, from investing in UK media. Same for pension funds of Japan, Netherlands etc. Such funds (list here) are not used as tools for their government’s foreign policy. They are what Baroness Stowell calls “indirect foreign-state passive investment” are not a problem. So they should be exempt from any new law.

But will the door be left open for minority stakes by foreign powers? So far, Baroness Stowell is optimistic that it won’t, saying:

I’ve been assured — and will ask the minister to repeat it from the despatch box this week — that anyone blocked by the definition of foreign power in the government’s amendments on the face of the Bill will not qualify for the exempt category to be set out in secondary legislation. In my view, the threshold for indirect foreign-state passive investment by the likes of sovereign wealth or state pension funds in the UK news industry — which is important economically to the news industry — should be set at 5 percent, and that’s what I’ve made clear to the government.

My ideal figure for the maximum “foreign power” stake is zero. But should IMI be banned from buying a single share in Reach Plc, the Daily Mirror owner? To set up a such a rule risks red tape — and vetting for any buyer of media shares. Perhaps the rule could be that anyone can buy shares in the open market, but foreign powers have to stop at the standard FCA rules for a “disclosable” state (ie, ~3 percent). And in private transactions, no media buyer sells any stake in a UK newspaper to a foreign power. Ministerial guidance would be effective here; it doesn’t have to be a law. A basic sense of decency has worked so far to prevent this, which is why Pearson is understood to have turned down a ~£1 billion Emirati bid for the Financial Times.

I can see why all this is sensitive for the Tories. The party has strong Emirati links: Sheikh Mansour had not one but two former Tory chancellors acting for RedBird IMI in this deal (Nadhim Zahawi and George Osborne). David Cameron, now foreign secretary, was actually living in Abu Dhabi last year. In my view, a law needs to be passed to ban any minister from ever working for any foreign power, as defined by this new law. This would stop any minister making any decisions now with a view to their retirement income in the future. It’s a clear source of potential corruption. 

Whatever the new media law is, the test — as stated by the amendment — is that it must “prevent foreign powers from gaining control or influence” — and that means no minority stake. That needs to be crystal clear.

Parliament has, so far, acted to defend press freedom — and it has worked. So well that you almost expect backsliding at the last minute. Baroness Stowell, who has led this campaign with flair and precision, has said she will make sure this week and ask questions. Much will depends on the answers.

This article was originally published on The Spectator’s UK website.