Britain's secretary of state on Wednesday ruled that the bid by Rupert Murdoch's media company to control the European satellite TV service Sky must undergo more rigorous regulatory scrutiny.
Karen Bradley, Britain's secretary of state for culture and media, formally referred 21st Century Fox's bid to consolidate the Sky service to Britain's Competition and Markets Authority.
While the move had been expected, it was a blow to the Murdochs. Bradley asked the authority to determine whether the mogul, his family and other Fox executives were "genuinely committed" to maintaining high broadcast standards.
At issue is whether the deal gives the Murdochs, who control 21st Century Fox, too much influence over British media. The family already owns several newspapers in the country, including the Times of London and the tabloid Sun. Sky News is a major provider of television and radio news in Britain.
Documents released Wednesday show that problems within U.S.-based Fox News have become a sticking point in the British government's review, undermining Fox's effort to quickly wrap up its consolidation of Sky, which provides TV service in Britain, Ireland, Germany, Austria and Italy. Fox currently owns 39% of Sky and has offered $15 billion to buy the remaining 61%.
Unlike in the U.S., British authorities tightly monitor the content and accuracy of news that is broadcast on radio and TV.
In documents, British officials expressed concern that Fox did not take seriously issues of sexual harassment within Fox News until after a high-profile anchor, Gretchen Carlson, sued the former chairman of Fox News, Roger Ailes, in 2016. Fox ultimately paid Carlson a $20-million settlement. In addition, Fox News' editorial standards were called into question following its coverage of the death in Washington of Seth Rich, a Democratic National Committee staff member, during last year's presidential election.
Critics in Britain have been working to derail Fox's acquisition of Sky. They worry that the Murdochs would turn the independent Sky News channel into a clone of conservative-leaning Fox News. These critics have lodged dozens of complaints about Fox News with British authorities.
Sky removed the Fox News channel from its lineup in late August as concerns about its content mounted in Britain.
"It appears that 21st Century Fox failed to put in place adequate compliance procedures for Fox News despite this being a condition of its UK broadcast license," British officials wrote in a letter this month to Fox. "The secretary of state considers this to have been a serious failure in compliance … [to] the requirements of impartiality and accuracy in news reporting."
The Competition and Markets Authority will have about six months to review Fox's proposed takeover of Sky, which was unveiled in December. A separate regulator, Britain's Office of Communications, in June determined that the Murdochs were "fit and proper" to own Sky and, as recently as last week, reiterated that conclusion, saying: "We consider there are not sufficient concerns that may justify a reference in relation to the broadcast standards consideration."
Bradley ultimately will decide whether to let the Sky deal go forward. While she has not reached a conclusion on the merger, "she is concerned about whether 21st Century Fox will have a genuine commitment to attaining broadcasting standards," according to the documents.
An earlier attempt by the Murdochs to buy Sky was abandoned amid the 2011 phone-hacking scandal involving Murdoch's British newspapers.
Fox executives have expressed confidence that its Sky deal ultimately will be approved. In a statement, Fox said: "We look forward to engaging with the CMA on their in-depth review as soon as possible."