Fox’s Sky Takeover Delayed, Referred to Competition Body

Rupert Murdoch’s attempt to land one of the crown jewels of European media was dealt a setback Thursday after the British government said that 21st Century Fox’s £11.7 billion ($14.9 billion) takeover of Sky needed to be scrutinized by U.K. competition authorities.

Culture secretary Karen Bradley said she was “minded to” have Britain’s Competition and Markets Authority to conduct an in-depth investigation into the proposed takeover, which could mean a delay that will force Fox to pay a special dividend for failing to get the deal done in the allotted time.

Some channel operators had expressed concerns about the deal, and the role of Sky News is also a notable concern among its opponents. During a high-profile dispute over carriage of its channels on Sky in the U.K. and Germany, Discovery said it was concerned that the “incentive to disadvantage independent TV content providers [would] only increase” in the wake of a Fox-Sky deal.

Murdoch, his sons James and Lachlan, and Fox have tried to make the Sky takeover more palatable to U.K. authorities since their last attempt foundered amid Britain’s phone-hacking scandal in 2011. In 2013, News Corp. separated its newspaper and publishing and TV assets, with the TV assets mostly contained in 21st Century Fox.

More recently, the late Fox News chief Roger Ailes stepped down in the wake of sexual harassment allegations and an ensuing scandal that was seen as possibly detrimental to Fox’s Sky bid. Another potential Fox News-related problem was made to go away when host Bill O’Reilly was forced out, also after allegations of inappropriate behavior. One of the women who accused O’Reilly of harassment traveled to London to meet with Ofcom officials and express her opposition to the Sky takeover.

Fox lobbyists have also reportedly met with lawmakers from Britain’s two major parties to thwart any political opposition to the deal. But the Labour Party’s deputy leader, Tom Watson, had called for the merger to be scrutinized by British competition authorities.

The deal would allow Fox to buy out the nearly 61% it does not already own of Sky, Europe’s biggest pay-TV provider, which operates in the U.K., Ireland, Germany, Austria, and Italy. Murdoch has been seeking full control of Sky for years.

The British government had first referred the takeover deal to media regulator Ofcom, which delivered its report on the bid to officials last week. The regulator assessed whether a Fox takeover posed any problems in terms of broadcasting standards and media plurality in the U.K. The government is expected to make the report’s findings public later Thursday.

The European Commission gave the takeover deal a green light back in April and said there were no major competition concerns. Irish authorities also gave their approval earlier this week.

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