Murdoch's British publisher News UK is among a dozen potential bidders. Photo: Stefan Wermuth/Reuters
Rupert Murdoch is already in line to bid for The Telegraph at an auction announced on Friday by its interim owner Lloyds Banking Group.
The nine-year-old media mogul is among a dozen potential bidders for the deal. which is expected to change the news industry in the UK and abroad. They were contacted by Auctioneers Goldman Sachs and confirmed the process had officially launched.
Mr Murdoch's British publisher News UK has registered interest in the bidding, despite widespread speculation that it was trying to bring in The Telegraph under the same control as The Times and The Sun, they will be blocked by regulators.
However, Westminster sources suggested that the digital revolution in news and news distribution could prompt new thinking about how competition and pluralism are measured. < /p>
Ofcom last carried out an analysis in 2019 and found that the Telegraph and News UK account for 26.5% of national newspaper consumption online and in print. On this basis, Murdoch's takeover of The Telegraph would create a combination slightly larger than that of DMGT, publisher of The Daily Mail and Mailonline, with 25.4% of weekly readership.
The regulatory hurdles that News UK may face in buying The Telegraph are expected to raise concerns that the newspaper may simply be seeking to gather intelligence on a rival or derail the deal. The bank will assess the credibility of all bidders before granting them access to detailed financial information, the sources said.
It is understood that News UK is independently managing its interest in this process and has not appointed investment banking advisers. News UK declined to comment on the auction, which brings the end of Murdoch's long career at the forefront of the media industry.
The 92-year-old is scheduled to step down as executive chairman of his companies at the end of the year and hand over the reins to his eldest son Lachlan. This week, an activist investor called for the collapse of the empire. Mr Murdoch senior has extensive experience working with The Telegraph, including numerous price wars against it.
Lloyds is also selling The Spectator magazine, which Mr Murdoch also expressed interest in acquiring in a separate auction. After a flurry of initial interest, it attracted fewer potential bidders than The Telegraph.
The first round of bidding for The Telegraph will begin in two weeks and will last four weeks. A second round with fewer bidders is expected to open after Christmas, with the auction likely to close in early February.
Along with Murdoch, the auction is expected to pit hedge fund bosses Sir Paul Marshall and Ken Griffin against a consortium led by former Telegraph editor Sir William Lewis. DMGT and German publishing giant Axel Springer took part in the tender.
Czech gas magnate and West Ham United investor Daniel Kretinsky is expected to take part in the auction, as well as local newspaper group National World and Belgian publisher Mediahuis. Several private equity firms have registered interest and may seek to provide capital to the winning bidder.
Numerous bidders are understood to be focused on The Telegraph's potential for international growth, particularly in the United States, where there is a significant gap in the news market among the center-right. The details of such investment plans are likely to play a significant role in how bids are assessed, along with pricing and regulatory issues.
Lloyds seized control of The Telegraph in June. The bank moved receivers from AlixPartners following a dispute with their previous owners, the Barclay family, over more than £1 billion of debts secured against them. Parent company Press Acquisitions Limited has appointed a new board led by chairman Mike McTighe to run the auction.
The Barclays have tried to scuttle the deal in recent days by offering £1bn to pay off the debt, backed by unidentified Abu Dhabi investors. Lloyds rejected this approach and took legal steps to distance The Telegraph from its former owners and prevent further disputes ahead of the sale.
It is understood Barclay's family have been told they can participate in the auction if they wish. However, their other businesses, including online store Very, are also linked to disputed debts to Lloyds.
Estimates for The Telegraph have ranged from £300 million to £1 billion, partly because sales to large national news organizations are rare and they command a premium that is difficult to predict. The Telegraph last changed hands in 2004 for £665 million.
In a message to staff, Telegraph Media Group chief executive Nick Hugh said: “There will undoubtedly be a lot of speculation in the coming months as potential bidders will come forward, but this remains business as usual for us.”
Lloyds will try to pay off as much of the debt as possible while securing new ownership of The Telegraph, which is acceptable to regulators and the government. Potential buyers will face scrutiny over the deal's impact on competition and public interest in media pluralism and freedom of expression.
It is understood that Lloyds is likely to consider bids contingent on less than 25% of the money from Gulf investors. At this level, broad ministerial powers will be exercised to delay or block the sale under the National Security and Investment Act.
Lloyds is committed to a quick and uncomplicated sale. Owning a powerful news publisher ahead of a general election is said to be awkward for Britain's biggest high street bank.
The Telegraph this week published independently verified subscription figures for the quarter to September. They showed a 5% increase in digital subscriptions, bringing their total, including print, to 1,012,631.
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