The Department for Culture, Media and Sport has launched a consultation on proposed draft regulations which will introduce exceptions to the Foreign State Influence (FSI) regime under the Enterprise Act 2002. 

The FSI regime, which came into force in Spring last year, prevents foreign state ownership of, or control over, UK newspapers and news magazines. Under the regime, the Secretary of State is required to issue a notice where there are reasonable grounds to believe that a merger involving a UK newspaper or news magazine has given, or would give, a foreign state (or a person associated with a foreign state) ownership, influence or control. This would prompt an investigation by the Competition and Markets Authority and, if it concluded that a merger would result in a ‘foreign state newspaper merger situation’, the Secretary of State would be required to make an order to block or unwind the merger. 

Earlier this year, as part of plans to update the media mergers regime (commented upon here) and to allay concerns about effects on investment, the Government announced plans to amend the FSI regime so as to introduce an exception which would permit a sovereign wealth fund or other state-owned investors (SOI) to hold up to 15% of the total available shares or voting rights in the owner of a UK newspaper or news magazine. 

That exception is now being further honed to account for the possibility that a number of SOIs from different states could each acquire up to 15% of a UK newspaper enterprise. As the consultation explains, even if they have no organised agreement to influence the newspaper, they could still nevertheless own the majority of the enterprise. As such, the Government is proposing to implement an aggregate limit of 15% on the shares or voting rights which can be held in a newspaper owned by multiple SOIs acting on behalf of different foreign states. However, holdings of shares or voting rights in quoted companies below 5% will be excluded from the 15% aggregate cap for multi-state SOI holdings. 

A further change to the regime is also proposed which seeks to address a concern that the Secretary of State may not be able to intervene in a case because a transaction has not been made public. Under this proposal, where an SOI has acquired a holding of shares or voting rights in a UK newspaper above 5%, it would be required to notify the Department of Culture, Media and Sport within 14 days of the acquisition completing. Should the SOI fail to do so, it would not be eligible for the exception. 

The consultation ends on 16 September 2025, and more information can be found here.