Business

Telegraph finance chief to leave amid Abu Dhabi deal probe

The finance chief of The Daily Telegraph’s parent company is to leave amid a government-commissioned probe into the newspaper’s takeover by a state-backed Abu Dhabi investment vehicle.

Sky News has learnt that Cormac O’Shea, who has been Telegraph Media Group’s (TMG) chief financial officer since the autumn of 2021, is likely to step down in the next couple of months.

This weekend, insiders said the independent directors of the broadsheets’ holding company – who were initially appointed by receivers and have stayed on to oversee the Telegraph’s sale – had written to the Department for Culture, Media and Sport (DCMS) to seek approval for the appointment of a successor.

Under the terms of a public interest intervention notice (PIIN) issued by Lucy Frazer, the culture secretary, late last month, the prospective owners of the Telegraph, RedBird IMI, are prohibited from exerting any influence over the titles while investigations by the competition and media regulators are ongoing.

That includes the removal of key executives and editorial staff or any attempt to merge the Telegraph with other assets.

TMG’s directors could appoint an interim successor to Mr O’Shea or could opt to run a search for a permanent replacement, with a protracted inquiry into the Abu Dhabi takeover looking increasingly likely, according to media analysts.

The precise reasons for Mr O’Shea’s departure were unclear this weekend, while it was also unclear whether he had been party to a pool of retention payments designed to encourage key employees to remain at the publisher while the sale process was ongoing.

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Mr O’Shea is the most senior executive so far to have signalled their departure since the Telegraph’s holding company was forced into receivership by Lloyds Banking Group earlier this year.

The high street lender effectively ousted the Barclay family as owners of two of Britain’s most influential newspapers after nearly 20 years, following a long-running dispute over the repayment of a £1.16bn debt.

The loans and interest were repaid earlier this month after the Barclay family structured a deal with RedBird IMI, which is majority-owned by Sheikh Mansour bin Zayed Al Nahyan, the ultimate owner of Manchester City Football Club.

Spearheaded by Jeff Zucker, the former CNN president, RedBird IMI has notified the independent directors of its intention to exercise an option to convert £600m of the funding provided to the Barclays from debt into equity ownership of the Telegraph.

The remainder of the loan is secured against other, unspecified, Barclay-owned assets.

RedBird IMI’s plans have sparked uproar among many Conservative MPs and peers who have argued that handing control of the traditionally Tory-supporting broadsheets could undermine media freedom.

A number of prominent Telegraph journalists and columnists have also used the newspapers’ pages to campaign against the takeover.

The Competition and Markets Authority and Ofcom have until late next month to report back to Ms Frazer on the deal.

Mr O’Shea is an experienced finance executive in international media businesses transitioning to digital operating models, including JPI Media, the regional newspaper business which owns The Scotsman, and Clear Channel International.

He does not sit on the board of TMG.

The Telegraph’s future remains mired in uncertainty, which is likely to be exacerbated if the RedBird IMI deal collapses.

Sources have cast doubt over whether the Barclays would be allowed to regain any influence of the titles in that scenario.

The Times reported this month that TMG’s independent directors had alerted Whitehall to possible irregularities in the accounts of the family’s media assets.

To complicate matters further, the chief executive of Ofcom will remain recused from a probe into the Telegraph takeover because her husband is an executive at Lloyds.

Dame Melanie Dawes, who has run the media regulator since 2020, will play no part in its investigation into RedBird IMI’s proposed deal with the broadsheet titles because of her marriage to Ben Brogan, the bank’s public affairs chief.

RedBird IMI is nevertheless continuing preparations to take control of the newspapers, along with The Spectator magazine.

The UAE-based vehicle has insisted that it would preserve the newspapers’ editorial independence and offered to give the government a legally binding assurance of this intention.

The Barclay family, which has owned the Telegraph since 2004, had been in dispute with Lloyds for years about the repayment of a £700m loan and hundreds of millions of pounds in interest.

RedBird IMI’s move to fund the loan redemption circumvented an auction of the Telegraph which drew interest from a range of bidders.

The hedge fund billionaire and GB News shareholder Sir Paul Marshall, Daily Mail proprietor Lord Rothermere and National World, a London-listed local newspaper publisher, had all hired advisers to assemble offers for the newspapers.

A spokesman for TMG declined to comment on Mr O’Shea’s impending departure, while the DCMS also declined to comment.

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