When the Barclay brothers bought the Daily Telegraph from a man facing a spell in prison, an almost throwaway accusation that they had taken advantage of an “owner in distress” ended with them suing the Times for criminal libel in France. It is perhaps ironic that their own distress as sellers almost 20 years later was first revealed by the same Rupert Murdoch-owned rival newspaper.
Yet the Barclay family has been “de-possessed” of the Telegraph Media Group not by a wealthier rival, but by their own bank manager. In a challenging economic environment, many people fear their house being taken over by the mortgage provider – but not many are struggling to repay debts of almost £1bn.
How brothers who pursued the Telegraph for years ended up with Lloyds’ Bank of Scotland seizing control and appointing a receiver is a story not just of age and family fallout, but the death of a way of doing business. They built a multibillion-pound business empire, still valued at £6bn in the last issue of the Sunday Times Rich List, from scratch by borrowing huge amounts of money in the loadsofmoney years that preceded the 2008 financial crisis.
Their story wasn’t meant to end this way. Sir David Barclay, the elder twin by 10 minutes and the driving force behind their unlikely career as newspaper owners, said buying a paper considered the house organ of the Conservative party was a “once-in-a-lifetime opportunity”. But David died, aged 86, in January 2021, leaving a family divided.
After eight decades of success with his once inseparable twin brother, the siblings had fallen out spectacularly over money and succession. Sir Frederick sued his brothers’ sons, grandson and longest-serving aide, Philip Peters, in the high court for bugging his private conversations over the sale of another trophy asset, the Ritz hotel – a crime he called “commercial espionage on an industrial scale”. The two sides only settled after David died, by which time Frederick was facing a £100m order to pay his ex-wife in a divorce settlement.
Two years on, he has still not paid, prompting the judge last month to summons his nephew Aidan Barclay, the largest shareholder of the family business, to give evidence and explain where the money was. It was that high court appearance – in which the chair of the Telegraph and 100 other companies employing 20,000 people said that business was “not actually easy” and that it was a time of “doom and gloom” – that seems to have acted as the catalyst for bankers unable to reach an agreement with the family over the repayment of debts.
Such an unusual public battle for an intensely private family has exposed a wildly complicated financial structure and the perils of borrowing too much to expand. Lloyds’ Bank of Scotland, itself the result of a crisis restructuring that swallowed up the over-extended Bank of Scotland at the start of 2009, described the decision to appoint receivers this week as “an act of last resort” after the failure of “numerous discussions with B.UK’s parent company, Penultimate Investment Holdings Limited”.
Until the bank made this statement, even some in the City did not realise that the Telegraph was owned not just by an offshore company registered in Jersey, but via a Bermuda-based business, B.UK, itself owned by Penultimate Investments Holdings Ltd, registered in 2021 in the British Virgin Islands.
The brothers had been so keen to buy the Telegraph that when an attempt to do a backroom deal with the then owner, Conrad Black, was blocked by other shareholders, they ended up paying £665m for it in July 2004, £400m more than the original behind-closed-doors offer. Having bought Littlewoods’ retail business, now called Very, just six months before, the brothers initially raised £272m in debt from the Bank of Scotland to plug the gap. Scroll forward 19 years and, in overly simple terms, this debt has essentially snowballed.
After appointing receivers AlixPartners to run the group while it prepares for a sell-off, Lloyds removed Aidan and Howard Barclay, the eldest of the family’s second generation, from the newspaper board along with Peters, who has worked for the family for decades.
The two sides – the Barclays and the bank – are continuing talks, with the family understood to have made a last-ditch effort on Wednesday to regain control with another offer. Both said they were still hopeful an agreement could be reached and stressed the financial health and robust performance of the Telegraph titles and the Spectator.
Although the value of Telegraph Media Group has fallen far from the high price in 2004 and has been largely written off in company accounts, the “for sale” sign is expected to attract several potential buyers.
As well as wealthy bidders from oil-rich nations and elsewhere, the Telegraph and Spectator – with a former well-paid columnist and editor who ended up in No 10 – make it attractive to other rightwing backers who still believe in the power of legacy media even without earnings to match.
Interest is expected to come not just from rivals such as DMGT, the owner of the equally Brexit-backing Daily Mail, but from the former editor turned entrepreneur William Lewis as well as two rivals who were beaten by the Barclays in 2004 – Axel Springer and David Montgomery’s National World.
The brothers’ case against the Times, which lasted more than two years, ended with a clarification published on page 61 of the Murdoch-owned Times, which did not pay any damages but stated: “We are happy to make the position clear and regret any distress caused.” In return, the Barclays dropped the case.
It was one of many court cases against journalists brought by the brothers, whose passion for print never really matched their passion for privacy. Any sale of the Telegraph titles will bring to an end their reign as the UK’s most unlikely newspaper owners.