Sale of stake in Independent to Saudi investor has ‘no influence’ on editorial coverage, watchdog rules

The acquisition by a Saudi investor of a share in the companies which publish The Independent and Evening Standard has had no impact on the publications’ coverage of the kingdom, media regulator Ofcom has found.

Culture secretary Nicky Morgan announced there would be no further inquiry into the purchase after Ofcom said there were no concerns over accuracy or freedom of expression that would warrant referring it to the Competition and Markets Authority.

A separate report by the CMA found the acquisition had not led to any substantial lessening of competition within the UK media market.

But Ms Morgan said it was “concerning” that publishers Independent Digital News and Media Limited (IDNM) and Lebedev Holdings Ltd (LHL) had failed fully to clarify the ultimate beneficial owner of the shares.

Ms Morgan has already stated she will not appeal a tribunal ruling that meant she missed a deadline to refer the case to the CMA.

But the Department for Culture, Media and Sport (DCMS) said today that Ms Morgan would not anyway have ordered an investigation, as Ofcom’s report went “a considerable way” towards allaying the public interest concerns originally raised by her predecessor Jeremy Wright earlier this year.

Evgeny Lebedev, who retains a 40.69 per cent interest in IDNM and 60 per cent of LHL, said the editorial integrity of both the Evening Standard and The Independent had been “completely vindicated by Ofcom, as we knew it would be”.

In a tweet, he wrote: “Poor judgement and errors by DCMS exposed, as we predicted. What a waste of public money, and ours.”

Mr Wright issued a Public Interest Intervention Notice in June following the purchase by Sultan Muhammad Abuljadayel and Wondrous Investment Holdings of a 30 per cent shareholding in IDNM and a 30 per cent shareholding in LHL. IDNM is the publisher of The Independent, while LHL is the majority shareholder in publishers Evening Standard Ltd, and the two companies operate under the name ESI Media.

In its report to the culture secretary, Ofcom said it could not rule out there may be “incentives and ability for the buyers to alter the accuracy or editorial stances of the publications”.

But after an analysis of Middle East coverage before and after the acquisition, Ofcom found “no evidence of any influence in practice in either the Evening Standard or The Independent news websites”, noting that articles containing critical views of Saudi Arabia continued to be published.

Of 1,545 Independent stories which made a significant reference to Saudi Arabia, Ofcom considered that 45 were positive in tone and 785 negative, with the remainder either mixed or purely factual.

The tally of 172 negative and six positive stories published in the six months after the acquisition was little changed from the 170 negative and five positive stories in the six months prior to the transaction.

Articles published by The Independent referred to Saudi Arabia as “the world’s most thorough-going autocracy” and discussed its “severe restrictions on freedom of expression” and “shameful war in Yemen”, while the website carried “highly critical” commentary about the murder of journalist Jamal Khashoggi.

The National Union of Journalists told the watchdog that members of The Independent staff had reported that the publication’s coverage of Saudi Arabia and its allies continues to be “accurate and tenacious in its pursuit of truth and accountability over human rights abuses and war crimes”.

Christian Broughton, the editor of The Independent, told Ofcom he had never met the Saudi shareholders or had any contact with them and had no knowledge of their opinions about anything.

Ofcom found: “The corporate structures include other strong shareholders, and the parties have put in place measures to preserve editorial freedom.

“The transactions do not appear to have had an editorial impact to date. We have carried out a detailed analysis of a sample of the content of both publications before and after the transactions, and there has been no evidence or substantial claims of any influence in practice to date.

“We cannot, of course, rule out any suggestion that the buyers might in future, perhaps with the other shareholders’ consent, seek to present more positive coverage of Saudi matters. However, this is a possibility in relation to other newspapers as well, for example to any newspaper potentially seeking to expand overseas.”

Although Ofcom noted that newspapers are not generally required to be transparent about their ownership, Ms Morgan voiced disappointment that neither company was willing to take further steps to address gaps in transparency and mitigate the risk of future inappropriate influence on editorial matters.

The Department for Digital, Culture, Media and Sport said in a statement: “Overall, the secretary of state’s conclusion is that Ofcom’s report goes a considerable way to satisfying her in relation to the public interest concerns relevant to this case, and based on Ofcom’s conclusions she would not have referred the case to a phase two investigation.”

In a statement, a spokesperson for ESI Media said: “We are pleased, but not at all surprised, that the secretary of state has agreed with the conclusions of the CMA and Ofcom. They both found that there were no grounds for the government to take further action in relation to the investments in The Independent and Evening Standard.

“Ofcom said there was no evidence whatsoever of interference by the investors in our editorial operations. This was after a thorough investigation, including the analysis of thousands of published articles and a public consultation.

“Ofcom considers the safeguards already in place to protect editorial freedom to be appropriate. Similarly, the CMA concluded that there was no need to pursue a further investigation on competition grounds.

“We said at the outset that this enquiry was disproportionate and unwarranted and our position hasn’t changed. We continue to take the editorial independence of both our titles very seriously.”