- RedBird IMI’s controversial Telegraph takeover
- CFO resigns amid acquisition probe
- Media freedom concerns rise
Cormac O’Shea is set to resign as the chief financial officer of Telegraph Media Group amid a government-commissioned investigation into the newspapers’ acquisition.
The parent company of The Daily Telegraph is poised to lose its finance chief in the midst of an investigation commissioned by the government into the newspaper’s acquisition by a state-backed Abu Dhabi investment vehicle.
Since the autumn of 2021, Telegraph Media Group (TMG) has had Cormac O’Shea as its chief financial officer. O’Shea is expected to tender his resignation within the next couple of months.
The independent directors of the broadsheet’s holding company, initially appointed by receivers and remaining to oversee the Telegraph’s sale, reportedly sought approval from the Department for Culture, Media and Sport (DCMS) to appoint a successor. Sources with knowledge of the matter claim this request was made in a letter to the department over the weekend.
According to a public interest intervention notice (PIIN) issued by Culture Secretary Lucy Frazer last month, RedBird IMI, the potential owners of the Telegraph, are not allowed to exert any influence over the titles during ongoing investigations conducted by competition and media regulators. This prohibition includes any attempt to merge the Telegraph with other assets or terminate key executives and editorial personnel.
Leadership Transition at TMG Amidst Abu Dhabi Takeover Investigation
TMG’s board of directors may appoint an interim successor to Mr. O’Shea or conduct a search for a permanent replacement. Media analysts predict that a protracted investigation into the Abu Dhabi takeover is becoming increasingly probable.
Over the weekend, it remained uncertain about the specific motives behind Mr. O’Shea’s departure. Also whether he had participated in a pool of retention payments intended to incentivize key personnel to continue working for the publisher during the sale process.
Mr. O’Shea is the highest-ranking executive to have announced their intention to leave the Telegraph. This occurred since Lloyds Banking Group placed the holding company in receivership earlier this year.
The Barclay family was forcibly removed from their positions as proprietors of two of the most influential newspapers in Britain by the high street lender after an extended dispute pertaining to the repayment of a £1.16 billion debt, which spanned almost two decades.
Following an agreement negotiated by the Barclay family with RedBird IMI, a company majority-owned by Sheikh Mansour bin Zayed Al Nahyan, the ultimate proprietor of Manchester City Football Club, the loans and interest were repaid earlier this month.
RedBird IMI, led by former CNN president Jeff Zucker, has informed the independent directors of its intention. They intend to convert £600 million of Barclays’ borrowed financing into Telegraph equity. This action is being taken in support of the option.
Concerns Over Loan Security and Opposition
The remaining balance of the loan is secured by unspecified assets that are also owned by Barclay.
Numerous Conservative Members of Parliament and peers have expressed outrage at the proposals of RedBird IMI. They argue that ceding authority to the customarily Tory-supporting broadsheets could compromise media freedom.
The Telegraph’s prominent journalists and columnists have also opposed the purchase.
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In the following month, Ms. Frazer received reports from the Competition and Markets Authority and Ofcom on the arrangement.
Mr. O’Shea has extensive experience as a finance administrator in international media companies undergoing the transition to digital operating models, including Clear Channel International and JPI Media, the regional newspaper company that owns The Scotsman.
He is not a member of the TMG board
The redundancy surrounding The Telegraph’s future is likely to intensify in the event that the RedBird IMI agreement fails.
In that scenario, sources have expressed scepticism regarding whether Barclays would be permitted to regain control over the titles.
Whitehall was alerted to apparent anomalies in the family’s media asset accounts this month, according to The Times. The independent directors of TMG were the ones who raised these concerns.
Due to the fact that her spouse is an executive at Lloyds, the Ofcom chief executive will continue to be recused from an investigation into the Telegraph acquisition, further complicating matters.
Dame Melanie Dawes, who has presided over the media regulator since 2020, will abstain from participating in its inquiry into the proposed agreement between RedBird IMI and the broadsheet titles due to her matrimonial union with Ben Brogan, the bank’s public affairs chief.
Despite this, RedBird IMI continues to make arrangements to acquire the periodicals, including The Spectator magazine.
The entity headquartered in the United Arab Emirates has pledged to maintain the editorial independence of the newspapers. Additionally, it has offered to provide the government with a legally enforceable guarantee of this.
For years, the Barclay family, the proprietors of the Telegraph since 2004, and Lloyds had been embroiled in a dispute concerning the repayment of a £700 million loan plus interest amounting to hundreds of millions of pounds.
In order to finance the loan redemption, RedBird IMI took action that bypassed a Telegraph auction that attracted numerous bidders.
