Sky-Fox takeover deal likely to face competition probe

The culture secretary has said she is "minded to" refer Rupert Murdoch's 21st Century Fox takeover of Sky to the competition watchdog.

Karen Bradley's decision is a blow to the media mogul's hopes of having the £11.7bn deal waved through without further scrutiny.

Mr Murdoch already owns 39% of the satellite broadcaster.

An earlier attempt to take over Sky was abandoned in the wake of the phone hacking scandal.

Ms Bradley told the Commons that Ofcom's report into the deal found it risked the Murdoch family having "increased influence" over the UK's news agenda and the political process.

"On the basis of Ofcom's assessment, I confirm that I am minded to refer to a phase two investigation on the grounds of media plurality," she said.

The parties involved can make representations to the culture secretary until Friday 14 July, when she will make a further decision about referring the deal to the Competition and Markets Authority.

Ofcom said it had no concerns about Fox's genuine commitment to broadcasting standards, which Ms Bradley said was a second test for approving the deal.

As a result she told MPs she was "minded not to refer" the bid for a phase two investigation in relation to those concerns.

"While there are strong feelings among both supporters and opponents of this merger, in this quasi-judicial process, my decisions can only be influenced by facts, not opinions - and by the quality of evidence, not who shouts the loudest," she said.

Tom Watson, the shadow culture secretary, told the Commons that "nothing about this decision is a surprise" as he predicted the government would eventually allow the merger to go ahead.

He said if James Murdoch, who is both chairman of Sky and chief executive of Fox, could pass a "fit and proper" test, "then that says more about the rules than it does about Mr Murdoch".

"It's clear that the rules need to be reviewed and if the current Conservative government won't do that then the next Labour government will."

Mr Watson said undertakings from the Murdoch family were "not worth the newsprint they are written on" as he warned that lessons had not been learned from the phone-hacking scandal.

He also accused the Conservatives of forming "an implicit bargain" with the Murdochs as he pushed Ms Bradley to order part two of the Leveson Inquiry into phone-hacking.

The culture secretary claimed Mr Watson was making a "cynical" attempt to politicise the issue and to prejudge the decision.

Evan Harris, executive director of the lobby group Hacked Off, said it condemned Ms Bradley's failure to refer the bid on commitment to broadcasting standards grounds.

"The Secretary of State must now begin Leveson part two immediately, and allow that inquiry to report before considering this merger further," he said.

The deal was approved by European Commission competition authorities in April.

Shares in Sky closed 3.3% higher at 988p, valuing the company at almost £17bn.

Analysts at Citi said it was possible Fox could find a resolution to Ofcom's concerns before the 14 July deadline and avoid a lengthy inquiry.

"Ultimately this is a positive outcome for the Fox/Sky in the sense that it makes deal completion more likely," they said.

"Concerns about broadcasting standards would have been almost impossible to work around, while we believe the groups will be able to offer concessions that adequately address concerns about plurality."