Lloyds Banking Group has forced the parent company of the Daily and Sunday Telegraph newspapers and Spectator magazine into administration due to debts of over £1bn owed by the Barclay family, which owns the securities. B.UK, a Bermuda-based holding company that ultimately controls the Telegraph Media Group, has been placed into administration. AlixPartners has been appointed insolvency practitioner at B.UK and has made changes to the boards of affiliates to ensure control of assets. Lloyds has yet to appoint a bank to oversee any transactions, although Lazard is advising on business options. The scale of the debts suggests Lloyds would struggle to recover their full value. The Telegraph Media Group has been put up for sale and has attracted interest from potential buyers in the past. Spectator magazine could be sold easily with Rupert Murdoch’s media group among others, potentially interested.
Additional Piece: The Impact of the Sale of the Telegraph and Spectator Newspapers
The news of the forced sale of the Telegraph and Spectator newspapers sent shockwaves through the media industry, raising questions about the future of the UK’s right-wing media landscape. The Barclay family, who acquired the Telegraph newspapers in 2004 and the Spectator in 2010, have long been synonymous with conservative journalism. Their ownership of these publications has helped to shape right-wing media discourse in the UK, with both papers being known for their pro-Brexit, anti-immigration, and anti-establishment views.
The potential sale of these newspapers comes at a time when the media industry is facing unprecedented challenges. The rise of digital media has fundamentally disrupted the traditional business models of print and broadcast media, leading to declining revenues and falling circulations. This has put pressure on publishers to cut costs, consolidate their operations, and find new sources of revenue.
The forced sale of the Telegraph and Spectator newspapers is a stark reminder of the fragility of even the largest media companies. It highlights the need for publishers to diversify their revenue streams and embrace new digital technologies to reach audiences. While the sale of these newspapers may lead to changes in the UK’s media landscape, it could also present opportunities for new players to enter the market and create more diverse and representative media.
Overall, the sale of the Telegraph and Spectator newspapers is a significant development for the UK’s media industry, with far-reaching implications for the future of conservative journalism in the country. It will be interesting to see who the buyers of these newspapers will be, and how they will seek to reshape these publications in the coming years.
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The Daily and Sunday Telegraph newspapers and Spectator magazine are to be put up for sale after their parent company was forced into administration by Lloyds Banking Group over £1bn of debts from the Barclay family, which owns the securities have dominated right-wing media discourse in the UK.
The bank has placed B.UK, a Bermuda-based holding company that ultimately controls the Telegraph Media Group, into administration, Lloyds confirmed Wednesday. AlixPartners has been appointed insolvency practitioner at B.UK.
AlixPartners has made a number of changes to the boards of its Bermuda-based holding company’s affiliates to “ensure control of assets”. He said this would help secure a resolution “which could involve the sale of the Telegraph and Spectator businesses”.
In a personal blow to the family, Aidan Barclay and Howard Barclay, the sons of the late Sir David Barclay, have been removed as editors of TMG and The Spectator.
Sir Frederick Barclay and his brother David acquired the Telegraph newspapers in 2004. The Barclay family loans were taken over by Lloyds with their takeover of troubled lender HBOS in 2008 and have since been written down as bad debt.
The debts are close to £1bn, higher than previously reported, according to people familiar with the situation. They are held in a complicated cascade of offshore holding companies that ultimately control the Barclay family’s media assets.
The Barclay family were still trying to salvage the assets on Wednesday but those close to the talks said Lloyds had lost patience with the situation. “The bank is moving very fast and very aggressively,” one person said. The lender said it remained “willing to continue discussions” with the family.
The Barclay family said in a statement: “We hope to reach an agreement that satisfies all parties. As AlixPartners has made clear, this situation is in no way related to the financial health or performance of the Telegraph or Spectator businesses.”
No financial impact is expected on Lloyds as the loans have long been classified as non-performing, according to a person familiar with the situation. This means that any proceeds will be written back to the British bank’s books.
The scale of the debts suggests Lloyds would struggle to recover the full value of the loans, as analysts estimate the bonds are worth between £500m and £700m.
A person close to Lloyds said this was not a “fire sale”; she has yet to appoint a bank to oversee any transactions. Lazard is advising Lloyds on business options. Lazard declined to comment.
The Lloyds Bank of Scotland unit said in a statement on Wednesday: “The decision to appoint insolvency practitioners is an act of last resort and follows numerous discussions with B.UK’s parent company, Penultimate Investment Holdings Limited (PIHL).
“The purpose of these discussions, which had been going on for a long time and undertaken in good faith, had been to find an amicable settlement and repayment of PIHL’s loan to the Bank of Scotland. Unfortunately, an agreement could not be reached, which required the appointment of insolvency practitioners.”
A sale would spell the end of a legendary ownership of Telegraph newspapers by the Barclay brothers. The twins acquired The Daily Telegraph for around £665m after battling competition from Daily Mail owner DMGT, German publisher Axel Springer and private equity groups led by former Mirror chief executive David Montgomery.
The Telegraph Media Group has attracted interest from potential buyers in the past, although a formal sale has never been confirmed. Rival media groups such as DMGT have been interested, according to former executives, although any such deal would be scrutinized by the competition authority. Czech energy tycoon Daniel Křetínský has also considered buying the spreadsheet in 2020.
Saudi wealth funds and other Middle Eastern funds have also expressed interest, according to media analyst Claire Enders, although she said they could face opposition from the British government in owning an influential British media group.
Enders said selling Spectator magazine could be easier. He said Rupert Murdoch’s media group – among others – would be interested in acquiring the influential British political magazine, and was less likely to face the kind of antitrust scrutiny that would result from a bid for the larger group. Telegraph.
People familiar with the situation said Lloyds’ move was unrelated to the Telegraph’s performance or the debt held at Telegraph Media Group level. Neither Telegraph Media Group nor Press Acquisitions will be placed into receivership.
For the year ending 2 January, Telegraph Media Group reported sales of £245m, up from £235.2m, and pre-tax profit of £29.6m, up from £22.1m. million pounds of the previous year.
A Barclays spokesperson said: “The assets within our portfolio continue to operate strongly, are managed by independent management teams, are well capitalized with minimal debt and strong liquidity. They have no liability for any liabilities of the holding company, continue to operate as normal and are unaffected by problems in the structure of the holding company above them.
Bank insiders said the lender’s former management was close to Aidan Barclay, but that Charlie Nunn, Lloyds chief executive since 2021, was reevaluating the bank’s portfolios to deal with legacy issues.
Other parts of Barclays’ business empire, including online retail group Very, are unaffected by the Lloyds move. However, renovation experts are closely monitoring other parts of the business as well. Carlyle, the private equity firm, has acquired a stake in the debt behind Very Group, according to people familiar with the situation.
A person close to the Barclays said the move came at a time when the family was distracted from legal action following David Barclay’s death in 2021.
During a hateful £100 million legal dispute between Frederick Barclay and his ex-wife, his nephew Aidan Barclay testified in the High Court in May that by August 2019 the family business, including Very, had to pay £650m to customers for child protection insurance payments, which had a “dramatic effect” on the business in terms of liquidity.
He said the situation has been difficult for family businesses since 2019 due to wage inflation and the pandemic, and that the PPI compensation “has left us with more restrictions in the banking sense than I would have liked”.
Additional reporting by Siddharth Venkataramakrishnan and Jane Croft
https://www.ft.com/content/1e16e3b9-9ead-408f-b657-81e4cf5b1164
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