Murdochs face further delay in quest to buy Britain's Sky TV

Murdochs face further delay in quest to buy Britain's Sky TV
Rupert Murdoch is executive chairman of 21st Century Fox, which faces further regulatory hurdles in Britain in its effort to take over Sky TV. (Adrian Sanchez-Gonzalez / AFP/Getty Images)

21st Century Fox's long-sought quest to gain full control of European pay-TV service Sky is facing further political head winds in Britain.

In a blow to Fox's plans, Britain's culture minister on Tuesday signaled she was leaning toward asking the Competition and Markets Authority to more closely scrutinize the acquisition. At issue is whether the deal gives the Murdochs, who control 21st Century Fox, too much influence over British media. The family already owns a number of major newspapers in the country, including the Times of London.


In June, the Office of Communications, Britain's broadcast regulator known as Ofcom, deemed that the Murdochs were "fit and proper" to own Sky.

On Tuesday, however, Culture Secretary Karen Bradley raised concerns as to whether Fox would adhere to broadcast standards.

Bradley's statements, made in an address to Parliament, were not entirely unexpected. She had previously expressed concerns over the deal's effect on media concentration in Britain.

Buying Sky, a valuable satellite network in Europe, has been a high priority for Murdoch and his two sons who control the media empire. Sky, which broadcasts Premier League soccer in Britain and other European markets, is valued at $25 billion.

Inquiries by the Competition and Markets Authority can take up to six months to complete. The company said the $15-billion deal to acquire the 61% of Sky that it does not own is now scheduled to close in June.

Critics of the deal have feared that Sky TV would take on the characteristics of Fox News Channel, which mixes in right-wing partisan commentary with its reporting in the United States.

Fox News also has been at the center of a sexual harassment scandal that has engulfed 21st Century Fox and has led to the firing of on-air talent and executives. The highly profitable unit also has been hit with a racial discrimination lawsuit from current and former black employees.

The company has investigated harassment claims since former Fox anchor Gretchen Carlson filed suit against the news organization's founding chief executive, Roger Ailes, who died in May. Mindful of the British regulators, 21st Century Fox has severed ties with most of the employees who have faced allegations.

In a statement, 21st Century Fox said it was disappointed in the decision, citing Ofcom's earlier comments that said there were no concerns about broadcast standards. "We urge the secretary of state to take a final decision quickly," Fox said.

Marci Ryviker, senior analyst at Wells Fargo, said in a report that the decision appeared to be a reaction to vociferous opponents of the deal in Britain.

"While disappointing, we don't think [21st Century Fox] was surprised by today's statement," she said. "Nor do we think the Fox News 'issues' are really at play. Ms. Bradley is trying to disentangle herself from shouldering the responsibility of this deal, in our view," Ryviker wrote.

Brian Wieser, an analyst at Pivotal Research, said it's hard to tell whether the new obstacle will hinder the long-term chances of the deal.

"Political winds are going to go a long way to informing what ultimately happens here," Wieser said. "Between now and then, Fox can remedy the concerns. It's kind of up in the air."

An earlier attempt to take over Sky was derailed by the 2011 phone-hacking scandal involving Murdoch's British newspapers. The company was forced to close its News of the World tabloid, the chief offender in the investigation.


U.S. shares in 21st Century Fox closed at $25.90, up 2 cents a share. Sky shares fell 1.7% at the close of the London market on Tuesday.

Twitter: @SteveBattaglio


4:25 p.m.: This article was updated with reaction from analysts.

This article was originally published at 1:15 p.m.