American investment firm RedBird Capital Partners has won the coveted deal to control the Daily and Sunday Telegraph. This interim agreement is a welcome relief that has brought to an end a two year ownership vacuum that has left staff in limbo. Sheikh Mansour’s International Media Investments (IMI) is involved in the deal. Combined, they fully reimburse the debts that the Barclay brothers had accrued while owning the publications.
As one of our banks, Lloyds Bank, was recently forced to repossess both the Telegraph titles and The Spectator magazine due to unpaid debts. This acquisition comes hot on the heels of that major movement. After this, the bank placed the assets on auction. Last year, hedge fund billionaire Sir Paul Marshall bought The Spectator for £100 million. This impending sale raised fears on the part of the former federal government over increases in foreign ownership in British media. To assuage these concerns, the government moved quickly to introduce legislation making it illegal for foreign governments to own UK newspapers and magazines.
Even with these challenges, the RedBird—founded by Gerry Cardinale—has now specified its plan for the Telegraph. The firm envisions investing heavily in expanding the publication’s audience base. In particular, they’re concerned about their subscriber growth in the US. In addition to the U.S. market opportunity, Cardinale sees another big gap for the Telegraph. He’s on track to exceed initial projections and take full advantage of this unique opportunity.
The staff at the Telegraph have expressed concerns over the lack of sufficient investment and direction during the two-year limbo period. As RedBird gets ready to assume control, employees are optimistic that new leadership will help bring the organization needed focus and direction.
RedBird’s investment strategy fits perfectly with its larger mission of revitalizing media properties while making them economically viable. As RedBird and IMI are putting the debts of the Barclay family to rest. This smart financial strategy puts them in-line to earn back their investment through the purchase price. This chess move removes costly liability. Perhaps most importantly, it lays the groundwork for smart future expansion in a highly-competitive media environment.