The must-read column: Kleinman on the City
The City's best-connected columnist on the Telegraph, the new football regulator and the NatWest share sale
Sky News’ City Editor Mark Kleinman writes a weekly column for City A.M., this week on the future of the Telegraph, the new football regulator and NatWest’s share share
THIS TELEGRAPH STORY WILL RUN FOR A WHILE
Hold the front page. Last week’s intervention by ministers to prohibit foreign state ownership of national newspaper assets has ended the aspirations of Jeff Zucker and RedBird IMI of adding their names to an illustrious list of Telegraph proprietors. They will have to console themselves instead with the ownership of All3Media, the Great British Bake-off producer.
Theoretically, RedBird could bring in other investors to replace Gulf-based IMI’s stake in a joint bidding vehicle – indeed, I understand that a number of private equity investors and limited partners in buyout funds have already been sounded out about that possibility.
More likely, though, RedBird IMI will engage bankers to advise on a sale – technically of the call option facilitating the conversion of a £600m debt secured against the Telegraph titles into equity.
Robey Warshaw, which has been advising RedBird IMI in recent months, might not be the obvious candidate to handle a sale, given that George Osborne, the former Conservative chancellor, has been heavily involved in the process. A protracted auction could mean that the future ownership of the Telegraph is determined under a Labour government.
The cast-list of prospective bidders is little-changed since the autumn. Paul Marshall, the GB News investor, remains interested, although he is no longer quite as enthusiastic about a deal, according to people close to him.
Then there are Daily Mail & General Trust and News UK, whose reported joint talks about an offer seem fanciful. An agreed offer from either would trigger a Phase-II competition inquiry, and risk delaying a decision by many more months.
That all adds up to an uncertain set of consequences for the Barclay family, the Telegraph’s beneficial owners, who have, I understand borrowed more than £1.2bn from RedBird IMI and IMI to retain some semblance of control of their assets. They will need a second auction of the newspapers to generate at least £600m, which should be possible but is by no means guaranteed.
Logic dictates that under the current Public Interest Intervention Notice issued by Lucy Frazer, the culture secretary, neither the Barclays nor RedBird IMI may exert influence or control over the Telegraph. That should displace both from the driving seat, clearing the way for the sale to be run by the titles’ independent directors – but even that may lead to more legal arguments. This has some way to run yet.
FOOTBALL’S TACTICAL ERRORS NEED EXPERT REFEREE TO TACKLE
Few industries lend themselves to hyperbole as readily as English football. The men’s national team is either depicted as world-beaters or abject clowns.
The same might be said of the game’s administrators – and the introduction of legislation this week to create a new football regulator indicates which end of that spectrum they and a meddling government might belong at. The inability of the Premier League to agree a financial ‘New Deal’ with its lower-league counterparts might end up being – to borrow a footballing metaphor – a spectacular own goal, but it is far from the only one scored by those with a claim to protecting the sport.
Lucy Frazer, the culture secretary, has intimated that the regulator may impose a far tougher settlement on them than the £836m six-year deal they have been wrestling with. That seems unlikely.
It’s tempting to lay the blame squarely at the door of rich Premier League owners squabbling amongst themselves as they desperately cling to the riches created by the world’s wealthiest domestic league, but the truth is more nuanced.
The top 20 clubs in English football – currently ranging from Arsenal to Sheffield United – currently distribute 17 per cent of their revenue to their lower-league counterparts, and some of them argue that to stand their corner in the latest deal on the table will entail them having to borrow money.
Others contend that Manchester City’s legal move to overturn the Associated Party Transaction rules which confer a degree – albeit limited – of equivalence over the finances of top-flight sides has sowed further anxiety and division. Until that is resolved, they say, a New Deal is impossible.
Add to the mix the chaos over the Profit and Sustainability Rules (PSR) which have triggered several points deductions, and the impression that a new overseer of the sport is required has become pervasive. Unfortunately, the bill leaves so many critical questions unanswered that it would be wise not to assume the new watchdog will offer a cure to football’s ills.
TELL SID? NOT YET, YOU DON’T
Word reaches me of an intriguing development on the Treasury’s preparations for the sale of part of its remaining NatWest Group stake, which is slated to take place in the summer.
Having lined up M&C Saatchi – the advertising agency whose founders helped propel Margaret Thatcher to power in 1979 – to create a worthy successor to the ‘Tell Sid’ privatisation campaigns of yesteryear, a hitch has emerged elsewhere in the plans.
I understand that the Cabinet Office has informed intermediaries hoping to participate in the retail offer that it is discontinuing the tender process in which they had been involved, citing its “complexity” and the type of set-up and infrastructure required to deliver the transaction.
Market research is understood to have indicated decent interest in the stock – depending upon the size of the discount – particularly from younger demographic groups.
That’s encouraging, but the Treasury will need to be sensible in setting a realistic minimum investment sum if it wants to ensure a truly mass market offering for a stake that taxpayers already indirectly own.
