21 June 2023

The race to buy the Telegraph group shows that newspapers are far from done

For the past couple of years the publication has been widely assumed to be in play, following the death of David Barclay and internecine family struggles.

By Stephen Glover

Printing the Daily Telegraph newspaper, London, 1903. Photo by The Print Collector/Getty Images

Many people, including even some journalists, believe the internet is slowly killing off newspapers. The end can’t be far off.

How, then, does one explain that the Telegraph Media Group, which has just come on the market, is thought likely to cost upwards of £600m? The Barclay brothers, Sir Frederick and Sir David, paid £665m for the daily and Sunday papers plus the Spectator in 2004 – about £1.1bn in today’s money. There has admittedly been a fall in value – unless the present sale far exceeds expectations – but it is much less of a decline than would have been predicted a few years ago.

The reason is that the Telegraph, like the Times and Financial Times, has successfully developed its paid-for digital version over recent years. It has about 750,000 subscribers, and it has plausibly set its heart on one million. (Print sales have dwindled, however; only around 150,000 of the subscribers are print-only.) The Telegraph Group made a profit of £29.6m in 2021, the most recent year for which figures are available. The total for 2022 may be close to £40m.

So the Telegraph is financially an alluring prospect, as well as a juicy trophy asset. Newspapers that are both profitable and prestigious seldom come on the market. No wonder unidentified suitors are queueing up. They will have done their due diligence, since for the past couple of years the Telegraph Group has been widely assumed to be in play, following the death of David Barclay and internecine family struggles. What wasn’t foreseen was the suddenness of the sale – with Lloyds Banking Group deciding to force it after the Barclays had mysteriously failed to settle a £1bn loan.

Who are the likely suitors? Most, if not all, are dependably right-wing. Axel Springer, the German publisher of the tabloid Bild, is believed to be one. It was runner-up to the Barclays in 2004. Daily Mail and General Trust (DMGT), touted by many as the favourite, was also a bidder 19 years ago. Paul Marshall, a hedge-fund tycoon and a major investor in GB News, is reportedly interested. There are any number of private equity firms that might throw their hats into the ring, as well as state-backed investors in the Middle East.

Rupert Murdoch is also a contender, but only for the Spectator, since as owner of the Times he wouldn’t be allowed by the competition authorities to buy a rival quality newspaper. Last autumn Murdoch dispatched Rebekah Brooks, his senior British executive who was acquitted of phone hacking in 2014, to ask Andrew Neil, boss of the Spectator, whether the magazine was for sale. It wasn’t, but it is now. The question is whether Lloyds is prepared to sell it to Murdoch separately – a price tag of between £50m and £70m has been floated – or whether the eventual buyer of the Telegraph Group might pass it on to him.

As far as DMGT is concerned, I wonder whether the favourite will run. (I should mention that I write a column for the Daily Mail but have no inside information.) Since 2021 Jonathan Harmsworth has been the sole owner of DMGT, having bought out all the other shareholders. Would he want to borrow hundreds of millions of pounds off his own bat to buy the Telegraph Group? If he did, there would be competition issues, though perhaps less so than in Murdoch’s case, since it would be argued that the Mail and Telegraph operate in different markets.

Marshall is the dark horse that could romp home. He has plenty of money and, although nominally a Liberal Democrat, embraces right-wing causes. One difficulty is that he knows little or nothing about newspapers, though I suppose he could employ DMGT (which already sells the Telegraph’s print advertising) to help him.

Axel Springer is obviously a seasoned publisher, but one with little knowledge of British newspapers. And God preserve the Telegraph from private equity firms, which would strip out costs, temporarily boost profits, and flog the paper. Saudi Arabian or other Middle Eastern buyers would be less rapacious since their pockets are so deep. Can one imagine the strings of this once venerable title being pulled in Riyadh or Abu Dhabi? I fear one can.

I admit to having a special place in my heart for the Daily Telegraph, which was the first paper I worked on over 40 years ago, as well as for the Spectator, where I wrote a column for nine years. The Telegraph I joined was famous for the accuracy of its news. I hope both publications can prosper in the hands of someone who cherishes them and respects their traditions.

An ideal solution isn’t obvious, given the suitors. Maybe a hero I haven’t thought of will ride to the rescue. By the way, the process may be quick since Lloyds wants its money.

Rupert Murdoch would, I believe, be a sound proprietor of the Spectator, though as he is 92 his stewardship might not last long. Since acquiring the Times in 1981 he has lost more than £300m on the paper, but has stuck with it through thick and thin until a recent turnaround. Remarkably, it and its Sunday sibling recently declared profits of £73.2m for 2022. Like the Telegraph, the Times is flourishing in the digital age.

The Barclays weren’t very good owners of my old paper, but at least they haven’t destroyed it. The Telegraph remains a precious national institution, and even those who don’t share its politics should wish it well.

Stephen Glover was a founder of the Independent and is a Daily Mail columnist