Rupert Murdoch's Sky takeover stalls after Culture Secretary 'minded to' refer bid to competition watchdog

Rupert Murdoch’s 21st Century Fox faces another hurdle in its bid to take full control of Sky after Culture Secretary Karen Bradley signalled her intention to refer the £11.7bn-takeover bid to the competition watchdog.

Should that happen as expected, the Competition and Markets Authority will then conduct a thorough “phase-two investigation” into the bid.

Ms Bradley said media regulator Ofcom had raised concerns over the effect the takeover would have on media plurality in the UK.

Ofcom is concerned that the deal could increase the ability of Mr Murdoch and his son James 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”, Ms Bradley told the Commons.

If referred, the CMA would report back within six months on its findings. However, the Culture Secretary said she would not refer the decision on the question of whether the merged Sky/Fox company would meet broadcasting standards.

Ofcom will publish its report later on Thursday as to whether the Murdochs are “fit and proper” people to own a TV broadcasting company.

The parties involved have until 14 July to make any further representations to Ms Bradley, at which point she will decide whether to refer the matter.

Labour MP Tom Watson was scathing in his response to the announcement, saying that the Culture Secretary always knew what she planned to do but had to “follow the established dance steps”.

The undertakings that Mr Murdoch’s company had offered in order to allow the deal to go through were “pretty minor” and Mr Murdoch always knew they would not be enough to satisfy Ofcom, Mr Watson said.

Mr Murdoch has further concessions “in its back pocket”, which will then be accepted by Ms Bradley so that she can be “written up as a tough operator”, Mr Watson said.

Previous undertakings by Mr Murdoch and his son James that promised editorial independence had not been honoured and were “not worth the newsprint they are written on” the Labour MP said.

Twentieth Century Fox is trying to buy the remaining 61 per cent of Sky that it does not already own. The UK is the final country required to grant approval for the deal after regulators in the other territories in which Sky operates – Ireland, Austria, Germany and Italy – all gave the green light.

Ms Bradley considered broadcasting regulator Ofcom’s findings on whether the deal is in the public interest and if Fox’s directors meet a “fit-and-proper” test. She said she had based her preliminary decision on Ofcom’s assessment.

Critics say the proposed deal would, if successful, give the billionaire’s family too much influence over UK media. Mr Murdoch has separated his newspapers from his TV assets in recent years but the Murdoch family still has significant control over both.

Mr Murdoch is co-chairman of Fox and executive chairman of News Corp, which owns The Times, The Sunday Times and The Sun. His son James is chief executive of Fox and chairman of Sky.

Mr Murdoch’s bid comes six years after his last attempt at taking the business over through News Corporation in 2011.

That bid faced opposition before being scuppered by the phone-hacking scandal at Mr Murdoch’s News International, which eventually forced the closure of the News of the World.

Ongoing civil cases against some of Mr Murdoch’s newspapers have raised questions about the suitability of Fox to take full control over Sky. The Murdochs were never charged in relation to phone hacking but Ms Bradley had previously flagged concerns over “serious” corporate governance failings.

Fox itself has also recently been embroiled in its own scandal in the US after several high-profile stars and senior executives at its news channel faced allegations of sexual harassment and bullying.

Campaign group Avaaz, which has helped bring victims forward to testify about their alleged treatment at Fox News, called on politicians to reject the deal.

Alex Wilks, campaign director at Avaaz, said: “Karen Bradley should make this decision based on what’s best for the British people, not Rupert Murdoch. If the Government green lights the deal based on more empty Murdoch promises, we’ll look hard at a legal challenge to protect our democracy.”

Sky’s shares jumped 3.5 per cent to 991p after Ms Bradley’s announcement but are still well below the 1075p per share offer tabled by Fox.