Ofcom chief to stay out of Telegraph probe after Lloyds loan repayment

Business

The chief executive of Ofcom will remain recused from a probe into the takeover of The Daily Telegraph even after Lloyds Banking Group – which employs her husband – is repaid a £1.16bn loan by the newspaper’s owners.

Sky News has learnt that Dame Melanie Dawes, who has run the media regulator since 2020, will play no part in its investigation into RedBird IMI’s proposed deal with the broadsheet titles because of her marriage to Ben Brogan, the bank’s public affairs chief.

Ofcom said in July, when Lloyds placed the Telegraph’s holding company into receivership, that Dame Melanie would recuse herself from discussions about its future owing to her relationship with Mr Brogan, who will leave Lloyds next year.

However, some people close to the process had expected the repayment of the Barclay family’s debt to Lloyds to pave the way for the Ofcom chief executive’s involvement in what will be one of the most politically sensitive public interest probes it has conducted since its creation.

Ofcom confirmed her status in relation to the Telegraph investigation on Monday.

Lucy Frazer, the culture secretary, has issued a public interest intervention notice (PIIN), triggering inquiries by Ofcom and the Competition and Markets Authority, amid concerns about the Telegraph’s editorial independence if it is majority-owned by a state-backed Abu Dhabi investor.

Conservative politicians, including the former party leaders Lord Hague and Sir Iain Duncan Smith, have been among those calling for the deal to face intense scrutiny and potentially to be blocked.

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News of Dame Melanie’s continued recusal from the Telegraph process comes as Lloyds awaits the repayment of its long-standing loans by the Barclays, with the transfer of the funds expected to be completed later on Monday.

The deal will represent a stellar outcome for Lloyds and its chief executive, Charlie Nunn, who is expected to sanction the return of hundreds of millions of pounds of excess capital to shareholders early next year.

Lloyds had long since written down the value of the Telegraph loans amid a protracted dispute with the Barclay family.

As Sky News revealed last week, the Barclays and RedBird IMI have been barred from removing Telegraph directors or key editorial staff during the probe after Ms Frazer made an interim enforcement order.

Lucy Frazer, Secretary of State for Culture, Media, and Sport, arrives at 10 Downing Street, London, for a Cabinet meeting. Picture date: Tuesday July 4, 2023.
Image:
Lucy Frazer

RedBird IMI is nevertheless continuing preparations to take control of two of Britain’s most influential newspapers, along with The Spectator magazine, after giving the newspaper’s board and the government on Friday notice of its intention to activate a call option that will convert loans secured against the titles and into shares.

The UAE-based vehicle has insisted that it would preserve the newspapers’ editorial independence and offered to give the government a legally binding assurance of this intention.

The Barclay family, which has owned the Telegraph since 2004, has been in dispute with Lloyds for years about the repayment of a £700m loan and hundreds of millions of pounds in interest.

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Ms Frazer is seeking reports from Ofcom and the CMA before the end of January, after which the takeover of the broadsheet newspapers could be approved or blocked.

RedBird IMI is funded in large part by Sheikh Mansour bin Zayed Al Nahyan, the owner of Manchester City, has agreed that a trio of independent directors, led by the Openreach chairman Mike McTighe, will remain in place while the inquiries is carried out.

Spearheaded by Jeff Zucker, the former CNN president, RedBird IMI’s move to fund the loan redemption circumvented an auction of the Telegraph which drew interest from a range of bidders.

The hedge fund billionaire and GB News shareholder Sir Paul Marshall, Daily Mail proprietor Lord Rothermere and National World, a London-listed local newspaper publisher, had all hired advisers to assemble offers for the newspapers.

Until June, the newspapers were chaired by Aidan Barclay – the nephew of Sir Frederick Barclay, the octogenarian who along with his late twin Sir David engineered the takeover of the Telegraph 19 years ago.

Lloyds and RedBird IMI declined to comment.

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