LONDON (AP) — Britain's government stalled Twenty-First Century Fox's takeover of the Sky pay television and broadband network Thursday after regulators said the deal could give Rupert Murdoch and his family too much influence over the country's media.
Culture Secretary Karen Bradley said Thursday that the deal "potentially raises public interest concerns" and said she is "minded to" send it to the Competition and Markets Authority for further review. Twenty-First Century Fox has two weeks to respond to issues raised by the communications regulator, Ofcom, before Bradley makes a final decision.
In a report on the transaction, Ofcom said the merged company would be Britain's third largest source of television news, and its influence would be magnified because it also owns newspapers, radio stations and online outlets.
"The transaction may increase members of the Murdoch Family Trust's ability to influence the overall news agenda and their ability to influence the political process, and it may also result in the perception of increased influence," Bradley said.
Murdoch's New York-based media group is trying to buy the 61 percent of Sky it doesn't already own, giving Twenty-First Century Fox easy access to Sky's 22 million customers in the U.K., Ireland, Austria, Germany and Italy. Critics have charged that the 11.7 billion pound ($15.2 billion) deal would give Murdoch too much power in the U.K., because his company already owns two of the country's biggest newspapers, The Sun and The Times.
Despite the government's move to investigate further, shares in Sky rose over 3 percent in London as investors seemed optimistic the deal would ultimately go through.
Buoying those hopes was the fact that Twenty-First Century Fox gave Ofcom assurances that it would protect the editorial independence of Sky News after the takeover. These promises may mitigate the public interest concerns, Ofcom said.
Also, Ofcom recognized that under Twenty-First Century Fox, Sky would remain a "fit and proper" company to hold a broadcast license. Bradley said she would not question this finding. That is important because several women who allege they were sexually harassed at U.S.-based Fox News said the takeover should be blocked because of corporate governance issues at the parent company.
Ofcom said "we have no clear evidence that senior executives at Fox were aware of misconduct before it was escalated to them in July 2016, after which action was taken."
Twenty-First Century Fox said in a statement that a CMA review would last at least 24 weeks, and that in such an event "the transaction is expected to close by June 30, 2018."
An earlier attempt to buy Sky was thwarted by the 2011 phone-hacking scandal that rocked Murdoch's British newspapers and led to the closure of the 168-year-old News of the World tabloid. A campaign group challenging the merger, Avaaz, compared the sexual harassment scandal at Fox to phone hacking, in which journalists were alleged to have illegally tapped into the phones of public officials, crime victims and members of the royal family.
"This emerging scandal, and the denials and obstruction by senior people at Fox, are analogous to the industrial-scale phone hacking in the U.K.," Avaaz campaign director Meredith Alexander said in a press release. Murdoch "is directly implicated in this, as he has been acting as CEO at Fox News since former CEO Roger Ailes was ousted in July 2016."
Tom Watson, media and culture spokesman for the opposition Labour Party, suggested the government had already made an "implicit bargain" to approve the takeover in return for Murdoch's support through his media outlets and warned Bradley that Twenty-First Century Fox's promises "are not worth the newsprint they're written on."
"The secretary of state has known all along what she wants to end up doing but she has to follow the established dance steps," Watson said.
Media analyst Alice Enders said Thursday's decision showed that Bradley would be scrupulous in zeroing in on the facts — rather than any perception of the actions of the Murdochs.
"What she is saying is that she is going by the book," Enders said. "She is going to make sure she has bulletproof cover."
Sky reported operating profit of 1.6 billion pounds ($2.1 billion) for the year ended June 30, 2016, on revenue of 12 billion pounds. The company offers more than 600 pay TV channels, which include programming such as Premier League soccer, news and the popular U.S. series "Game of Thrones," which attracted an average of more than 6.5 million viewers per episode.