It claims that the deal is likely to be ‘against the public interest’
Murdoch-Trump and the Disney-Fox deal
A U.K. regulator is recommending that the government block Rupert Murdoch's planned $16 billion takeover of Sky TV in its current form.
The Competition and Markets Authority (CMA) said in a statement Tuesday that the proposed deal by Murdoch's 21st Century Fox(FOX) is likely to be "against the public interest" because it would give the mogul too much control over British media.
"Media plurality goes to the heart of our democratic process. It is very important that no group or individual should have too much control of our news media or too much power to affect the political agenda," said Anne Lambert, chair of the regulator's investigations group.
The CMA's recommendation is provisional. Its final report will be submitted to U.K. Culture Secretary Matt Hancock by May 1. He will then have to decide whether to block Murdoch.
If he does, Disney(DIS) — which is buying most of 21st Century Fox — would end up owning Fox's existing 39% stake in Sky. Disney would then have to decide whether to make its own offer for the remaining 61%.
The CMA proposed steps 21st Century Fox could take to address its concerns, including spinning off Sky News.
The British government asked the regulator in September to examine the Sky takeover because of concerns that the deal would concentrate too much power in the hands of the Murdoch family.
Murdoch already owns three of Britain's biggest newspapers: The Sun, The Times and The Sunday Times.
21st Century Fox said in a statement Tuesday that it was "disappointed" by the CMA's provisional findings and would continue to engage with the regulator.
Sky said it had noted the regulator's statement, and its proposed remedies.
There was some good news for the companies, however. The regulator, which had been asked to examine Fox's "genuine commitment to broadcasting standards," said that it was not concerned about that issue.
Sky shares jumped by more than 3% in London.
The review has become a hot political issue in Britain, where some politicians have pushed for closer examination of the Murdoch family following a series of scandals at the U.S. cable news channel Fox News.
It's not clear how Disney, Fox and Sky will react to the regulatory guidance announced on Tuesday.
The CMA noted in its decision that concerns about media plurality would be weakened if Disney — and not 21st Century Fox — were trying to buy Sky.
But the agency said it could not take the Fox-Disney deal into account because it is "unlikely to be completed" before its regulatory review is completed.