Telegraph Take-Over To Escape Public Interest Test
The Barclay brothers are not expected to face a public interest regulatory test over their acquisition of the Daily Telegraph, meaning that final clearance for the £665 million deal is now just a formality.
It is understood that senior executives at the media super-regulator Ofcom do not expect to be asked by Trade and Industry Secretary Patricia Hewitt to intervene in the take-over, which was agreed in June after months of fearsome bidding (see Barclay Brothers Take Control Of Telegraph Titles).
The Telegraph take-over is the first major media deal to be concluded under the regulations set out by the Government’s recently passed Communications Act. The legislation gave Ofcom extensive powers to investigate the public interest implications of media mergers deemed to raise competition concerns by the Department of Trade and Industry.
A senior Ofcom official told The Times: “We’re relieved not to be examining the take-over of the Telegraph“, making it clear that the subject was deemed to be a major political minefield. He added: “The signals we’re getting from the Government are pretty clear.”
Ofcom chief executive, Stephen Carter, is also thought to be against a public interest enquiry, believing that intervention by Ofcom would be damaging for the Telegraph because it would delay commercial decisions while the new owners negotiated with the regulator.
The plurality test was introduced at the last minute by a group of peers determined to limit the dominance of large media owners and ensure that they do not interfere too much with the companies they acquire. It could add new uncertainty to media mergers because it judgements are more subjective that those made purely on competition grounds.
The Telegraph take-over is unlikely to be deemed against the public interest, given that the billionaire brothers do not own another national newspaper and have a history of non-interference in editorial matters. However, the Department of Trade and Industry still have ten day to intervene once the deal is notified to the Office of Fair Trading.
Hewitt’s expected decision suggests that relatively few media mergers will be subject to the public interest test, which is in-line with intention of the Communications Act to deregulate the market. The was public interest test was originally created to make it harder for Murdoch’s News International and any other large newspaper groups wanting to take control of Channel Five (see Government Ends Media Ownership Deadlock).
Ofcom: 020 7981 3040 www.ofcom.org.uk
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