Culture Secretary prepared to refer Sky, Fox deal to CMA

21st Century Fox takeover of Sky referred to competition watchdog

21st Century Fox takeover of Sky referred to competition watchdog

Fox owns 39% of Sky but wants to assume total control of the broadcaster.

The Culture Secretary is likely to refer Rupert Murdoch's proposed Sky takeover to the Competition and Markets Authority. At issue is whether the deal gives the Murdochs, who control 21st Century Fox, too much influence over British media. Another Murdoch company, News Corporation, already owns British newspapers the Times, the Sunday Times and the Sun.

They say Mr Murdoch does not meet the requirement that United Kingdom media owners be "fit and proper" people. Fox recently yanked the news network from the Sky platform, but as late as last week Fox confirmed to Variety that it still held the British license for the channel to operate, although it meant to surrender it. Ofcom, meanwhile, confirmed that it will continue to investigate open complaints against the channel in the United Kingdom.

Bradley's statements, made in an address to Parliament, were not entirely unexpected. James Murdoch is the chairman of Sky and CEO of the Fox group - there is also heavy involvement from his father Rupert Murdoch. Sky, which broadcasts Premier League soccer in Britain and other European markets, is valued at $25 billion.

The in-depth inquiry could take as long as six months. Now the whole $15 billion dollar deal will face its own (latest) delay.

Critics of the deal have feared that Sky TV would take on the characteristics of Fox News Channel, which mixes in right-wing partisan commentary with its reporting in the United States.

Douglas Wigdor, a United States lawyer representing current and former employees who are suing Fox for racial discrimination, also welcomed the announcement.

Fox News, which was controversially taken off the air in the United Kingdom just last week, has been beset by a series of racial and sexual harassment scandals in the U.S. that have resulted in the departure of a string of top executives, including the late chairman, Roger Ailes, and the Fox News anchor, Bill O'Reilly.

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Ofcom has said it reserves the right to continue reviewing any additional evidence in its ongoing consideration of whether 21st Century Fox meets the "fit and proper" standard. Bradley said weaknesses within Fox's governance could potentially impact the company's broadcasting standards.

Fox and Sky now have 10 working days in which to respond to Ms Bradley's statement.

Tuesday's statement that Bradley intends to recommend a further review is in line with what she had signaled she would do in June. "Nor do we think the Fox News "issues" are really at play".

Bradley wrote on 7 August: "A number of representations contend that Ofcom has not considered all the evidence".

Brian Wieser, an analyst at Pivotal Research, said it's hard to tell whether the new obstacle will hinder the long-term chances of the deal.

"The direction of the political winds in the United Kingdom are less favourable every day with Labour rising", said Alice Enders, head of research at Enders Analysis. "Between now and then, Fox can remedy the concerns". Wrongdoing at News Corp.'s United Kingdom newspapers scuppered a 2010 attempt to buy the rest of Sky, while this time, sexual- and racial-harassment allegations at Fox News have given opponents ammunition to slow a deal that initially appeared on track to sail through. Fox shares were little changed.

Sky shares fell 4% on the news before recovering slightly to close down 1.6%.

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