In setback to Murdoch, UK refers Fox bid for Sky to regulator

21st Century Fox takeover of Sky referred to competition watchdog

Fox's Sky Deal: UK Plans In-Depth Review on Competition and Broadcasting Standards Grounds

Karen Bradley, the Secretary of State for Culture, Media and Sport, says she is "minded to" refer 21st Century Fox's £18.5bn takeover of Sky plc, the owner of Sky News, to competition watchdogs on grounds of broadcasting standards.

She made the decision, after months of deliberation, because of media plurality and whether there is a commitment to broadcasting standards.

Rupert Murdoch's Fox, which owns 39% of Sky, wants to buy the shares it does not already own. Adding Sky News to the mix would give the Murdoch family influence over a third of the news sources used in the United Kingdom, according to a June report by communications watchdog Ofcom.

Bradley has already indicated she will refer the deal to the Competition and Markets Authority on grounds that the Murdoch family's controlling stakes in both News Corporation and Fox would further concentrate media ownership in the UK.

She said some representations contended that Ofcom did not adequately take into account Fox's approach to broadcasting in global jurisdictions - for example, the USA and Australia - citing examples of "alleged biased, divisive and grossly inaccurate reporting". "These are matters the CMA may wish to consider".

Shadow Culture Secretary Tom Watson said he welcomed Ms Bradley's decision and praised her as a "good 'un".

Twenty-First Century Fox said it was disappointed in the decision, noting that United Kingdom broadcast regulator Ofcom had advised the government that the deal did not raise concerns about broadcast standards.

Turning to the debate about possible corporate governance failures, Bradley said that Ofcom stated in its latest correspondence "that these raise non-fanciful concerns in respect of the broadcasting standards ground".

"How can we possibly trust the Murdochs with total control of Sky News?" "However, it is clear to me that Parliament intended the scrutiny of whether an acquiring party has a "genuine commitment" to attaining broadcasting standards objectives to happen before a merger takes place".

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She said one area raised by critics of the deal was "what they termed the "Foxification" of Fox-owned news outlets internationally". "Extra reasons have been added as to why it is being referred to the CMA, such as broadcasting standards and corporate governance, but from a practical standpoint it doesn't hugely change things", said Liberum Capital's Ian Whittaker.

Bradley also asked Ofcom to respond to representations that argued that Fox's supposedly tougher new corporate governance measures had failed.

Sky shares dropped by roughly 2% in London.

Fox's bid for Sky may be delayed after a minister questioned whether phone-hacking and harassment scandals could hurt broadcasting standards.

Decision on £11.7 billion deal to be pushed back another 6 months pending regulator's approval.

Other opponents of the deal lined up to laud Bradley's announcement.

Bradley was under high pressure to carry out further investigation.

Critics have said the Murdochs have too much power as owners of Fox and News Corp., which owns British newspapers The Times and The Sun, while Fox has highlighted the separation of its entertainment businesses from newspaper company News Corp. a few years ago and the rising influence of online and social media.

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