The Daily and Sunday Telegraph are to be put up for sale after the Barclay family lost control of their media empire in a row with Lloyds Banking Group. Here are the key questions about the fate of the newspaper group.
What is the Telegraph worth?
Frederick Barclay and his twin brother, David, paid £665m for the Telegraph titles and the Spectator magazine in 2004 It is widely believed they overpaid, as the internet era began to expose the issues of long-term structural print decline in the industry.
In 2019, when the Barclay brothers tested the market value of the titles as part of a bitter family feud, potential suitors were evaluating bids of no more than £200m.
While the Telegraph’s financial fortunes have improved – last year it made profits of £30m and its subscriber-focused business model has added commercial resilience – the typical valuation based on multiple profits indicates itis worth significantly less than £500m.
However, the rarity of a newspaper asset such as the Telegraph titles coming to market, given the status their media and political influence can lend an owner, will add a “trophy” value premium to any sale process. In 2015, Japan’s largest media company, Nikkei, paid £844m for the Financial Times, stunning rival bidder Axel Springer of Germany.
Analysts estimate the Telegraph titles are likely to be worth in the region of £500m to £700m.
Who may buy the Telegraph titles?
It makes the most commercial sense for an existing industry player to buy the Telegraph titles, to bolster size and achieve economies of scale in the challenging publishing market.
The Daily Mail owner DMGT, which is run by Lord Rothermere, has previously expressed interest in a deal, although it would most probably face regulatory scrutiny because of competition concerns.
So too would publicly listed Reach, which owns the Mirror, Express and Star nationals, and Rupert Murdoch’s News UK, the owner of the Sun and Times.
In 2019, the Belgian group Mediahuis, which that year paid €145.6m (£125.2m) for Independent News & Media, the publisher of the Irish Independent and Sunday Independent, was rumoured to be a potential buyer. The Irish arm of Mediahuis is chaired by Murdoch MacLennan, a former chief executive of Telegraph Media Group.
Longer shots include National World, which is run by David Montgomery, a former chief executive of the publisher of the Mirror titles. Montgomery advised the venture capital firm 3i in a bid to buy the Telegraph in 2004, in an auction the Barclays eventually won.
The Amazon founder, Jeff Bezos, who paid $250m (£200m) to buy the Washington Post in 2013, was linked to a potential bid for the Telegraph in 2018.
The Telegraph is also likely to attract interest from wealthy individuals and sovereign wealth funds seeking status and influence, in the same way the Premier League is awash with foreign owners, with Saudi Arabia particularly keen on UK assets.
Are there likely to be competition or political concerns over potential buyers?
Yes. In 2019 the government launched an investigation into the sale of stakes in the Independent and the Evening Standard, which are controlled by Evgeny Lebedev, to an investor with strong links to Saudi Arabia.
The then culture secretary, Jeremy Wright, had been unpersuaded by Lebedev’s guarantees that editorial independence would not be compromised.
In that case the investigation did not go ahead after judges at the competition appeal tribunal ruled that the government issued its intervention notice too late to formally intervene.
For other potential buyers, such as DMGT, control of such a swathe of the national newspaper market could also raise not just competition but plurality concerns with regulators.
However, regulators have been encouraged by media owners to relax their views on plurality and competition issues as newspaper groups seek to build viable businesses in the digital era.
In 2018, UK regulators cleared the £200m deal that combined the Labour-supporting Daily and Sunday Mirror with Brexit-supporting rivals the Daily Express and Daily Star, concluding it did not lessen competition or raise concerns about the range of views and the free expression of opinion in Britain’s newspapers.
Similarly, the government has eased restrictions on the Times and the Sunday Times merging operations, ending rules that have been in place since Murdoch bought the newspapers in 1981.
