Stay informed with free updates

Just sign up to Media myFT Digest — delivered directly to your inbox.

The UK is considering doubling the proposed threshold for foreign state ownership of the country’s news outlets in response to fears that setting the threshold too low would prevent deal-making in the industry. in the media.

A Labor government could allow stakes as large as 10 percent, much higher than the 5 percent level consulted by the previous Conservative administration, according to people familiar with the matter.

In March last year, the Tories changed the law to ban foreign states from owning stakes in UK news organizations for the first time, a move designed to block newspaper takeovers by Telegraph to a US investor supported by the United Arab Emirates.

Ministers intend to introduce an exemption from the ban on small stakes under a certain threshold to allow passive investment, especially in listed media companies, from sovereign wealth and pension funds in the state. A consultation on setting 5 percent as the level continues when Labor ousts the Tories in the July UK general election.

A person with knowledge of the current government’s thinking described 10 percent as a “smart” level, adding: “It’s all about finding the balance to allow deals to happen without giving any control to editorial or influence of foreign states.”

The Department for Digital, Culture, Media & Sport said: “We have not made any final decisions on the level of exemption for ‘State Ownership’ from the new foreign state newspaper regime. Considering We are still reviewing the responses to the consultation and will make an announcement in due course.

The Telegraph is still without a permanent owner after the Barclay family lost control of the company due to unpaid bank debts, but an attempt to buy the RedBird IMI group has been blocked by an ownership ban. in a foreign state. RedBird IMI is a joint venture between US fund manager RedBird Capital and Abu Dhabi-owned media investment company IMI.

People close to the sale said RedBird Capital could still acquire a stake in Telegraph separate from the IMI partnership.

UK media groups have privately raised concerns with the government that setting the threshold too low could prevent them from tapping sources of money from cash-rich states in the Middle East. When the Telegraph was first put up for sale in 2023, for example, the The owners of the Daily Mail held talks with investors from Qatar about the potential to collaborate on a bid.

Media executives are also concerned that the law will hit state pension funds, as do many Norwegian, Canadian and Australian shareholder funds in listed media companies.

Labour’s decision on where to set the ownership threshold will be controversial given last year’s heated debate among MPs about the risks of allowing foreign states the ability to exercise influence over UK media.

Parliamentarians from both main parties were critical of RedBird IMI’s bid, as were Telegraph executives themselves. Among concerned Tory MPs, a key concern is the potential for overseas control by a right-wing broadsheet seen as influential in their party leadership contests.

The sale of the Telegraph, which led to intense scrutiny of press freedoms in Abu Dhabi itself, strained relations between the UK and the UAE, which is a major British investor.

Emirati officials have expressed disappointment over pejorative comments made about their state by a group of British politicians in relation to the proposed Telegraph deal. Former Tory leader Sir Iain Duncan Smith was among the MPs who argued that the UAE’s involvement would raise “security concerns” despite the defense ties between the two countries.

Prime Minister Sir Keir Starmer traveled to Abu Dhabi last month hoping to reset ties.