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The UK is considering doubling the proposed limit on foreign ownership of the country's media in response to fears that setting the threshold too low will unnecessarily restrict cooperation in the media industry.
A Labor government could allow dividends as large as 10 per cent, much higher than the 5 per cent level that the previous Conservative administration had negotiated, according to people familiar with the matter.
In March last year, the Tories changed the law to ban foreign countries from holding positions in UK news organizations for the first time, a move designed to prevent a takeover of the Telegraph newspaper by a US investor backed by the United Arab Emirates.
Ministers intend to introduce an exemption from the ban on small shares under certain limits to allow investments made, especially in listed media companies, from private wealth and public pension funds. Consultations on setting the 5 per cent rate as the stage continues when Labor ousts the Tories in the July UK general election.
One person familiar with the current government's thinking described the 10 percent as a “reasonable” level, adding: “It's all about finding a balance so that deals can be agreed without giving any editorial control or influence to foreign countries.”
The Department for Digital, Culture, Media & Sport said: “We have not yet made final decisions about the extent of the exclusion of 'Public Investors' from the new foreign press regime. We are still considering 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 the company due to unpaid bank debts, but an attempt to buy the group by RedBird IMI has been blocked by a ban on foreign ownership. RedBird IMI is a joint venture between US fund manager RedBird Capital and Abu Dhabi media investment company IMI.
People close to the sale said RedBird Capital may also take a stake in Telegraph separately from its partnership with IMI.
Media groups in the UK have privately raised concerns with the government that setting the threshold too low could prevent them from being able to access financial resources from rich countries in the Middle East. When the Telegraph goes on sale in 2023, for example, the The owners of the Daily Mail held talks and investors from Qatar about having a potential bid.
Media executives are concerned that the law will hit public pension funds, such as those in Norway, Canada and Australia that own shares in listed media companies.
Labour's decision on where to place ownership limits could be controversial given the fierce debate last year among MPs about the risks of allowing foreign countries to influence UK media.
MPs from both main parties were critical of the RedBird IMI bid, as were executives at the Telegraph itself. Among concerned Tory MPs, the main concern was the power of an overseas right-wing broadsheet seen as influencing their party's leadership contest.
The sale of the Telegraph, which led to a major review of press freedom in Abu Dhabi itself, damaged relations between the UK and the UAE, a major investor in Britain.
Emirati officials have expressed dismay at the derogatory comments made about their country by a string of British politicians over the proposed Telegraph deal. Former Tory leader Sir Iain Duncan Smith was among the MPs who said the UAE's involvement would raise “security concerns” outside the defense relationship between the two countries.
Prime Minister Sir Keir Starmer traveled to Abu Dhabi last month hoping to restore relations.