Fox’s Sky takeover set for UK watchdog probe

21st Century Fox’s £11.7 billion (€13.2 billion) takeover of European pay TV operator Sky is likely to be referred to the UK’s Competition and Markets Authority.

The UK government’s secretary of state for culture, media and sport, Karen Bradley, made the surprise announcement earlier today after consulting with media regulator Ofcom.

She pointed to “material influence” that Fox owners the Murdoch family would gain in the British news market from the deal, and was therefore “minded” call for a ‘phase two’ investigation on grounds of media plurality.

The takeover had been plain sailing for Fox until this point, with other European and, most recently, Irish media watchdogs waving it through with few concerns.

Rupert Murdoch’s previous attempt to take over the shares in Sky that it doesn’t already own was derailed in 2011 after the phone hacking scandal at Murdoch-owned news publisher News International broke.

Should Fox acquire Sky, it would own the UK’s largest pay TV operator; four newspapers: The Times, Sunday Times, The Sun and News of the World; and news channel Sky News.

In its report, Ofcom identified “a risk of increased influence by members of the Murdoch Family Trust over the UK news agenda and the political process, with its unique presence on radio, television, in print and online”.

Bradley and Ofcom see this as potentially posing problems for both the British news media and political process.

“We consider these concerns may justify the secretary of state [referring the deal] to the Competition and Markets Authority. I am minded to refer to a phase two investigation on the grounds of media plurality,” said Bradley.

Ofcom has meanwhile ruled that the “overall evidence” did not provide “a reasonable basis” to conclude that a Fox-owned Sky would not be “a fit and proper” holder of a broadcast licence.

This was a separate probe carried out by the regulator in parallel with the public interest investigation, and included a consideration of the recent sexual harassment scandals that have plagued Fox News in the US.

“Our assessment finds that Sky would remain a fit and proper licence holder in the event of the merger,” said Ofcom. “As fitness and properness is an ongoing duty, we can re-examine our position if new evidence comes to light.”