Fox’s proposed takeover of Sky is not in the public interest on grounds of media plurality, the UK’s Competition and Markets Authority (CMA) has said.
The CMA has provisionally found that if the deal went ahead as planned, it would give the Murdoch family too much control over news providers in the UK.
However, the CMA found the deal would not be against the public interest on the grounds of broadcasting standards.
Disney has agreed to buy most of Fox’s business, so may end up owning Sky.
Disney’s proposed takeover, which still has to be approved by US regulators, includes Fox’s current 39% stake in Sky.
And if the Sky-Fox deal does finally go through, the whole of Sky would be likely to transfer to Disney’s ownership.
Fox has been trying to buy the 61% of Sky that it does not currently own.
But the CMA decided that if this happened, the Murdoch Family Trust (MFT)’s control across all media platforms in the UK would give it too much influence over public opinion and the political agenda.
The MFT’s news outlets are currently consumed by nearly a third of the UK’s population across TV, radio, online and newspapers.
That is significantly greater than all other news providers, except the BBC and ITV.
In a statement, Fox said it was “disappointed” by the findings.
It added: “We will continue to engage with the CMA ahead of the publication of its final report in May.
“We welcome the CMA’s provisional finding that the company has a genuine commitment to broadcasting standards and the transaction would not be against the public interest in this respect.”
Sky said that it noted the CMA verdicts on both sets of grounds and that it “had set out possible remedies” around plurality “and is seeking submissions on these”.
The CMA also concluded that Fox had a “genuine commitment to broadcasting standards in the UK” and was established in the country.
It added that Sky also had a good record with “comprehensive and effective policies and procedures” to ensure the quality of its broadcasts.
The CMA also considered recent allegations of sexual harassment against Fox News employees in the USA, but provisionally found these were not directly related to the attainment of broadcasting standards.
Disney deal impact
Disney agreed to buy the majority of 21st Century Fox’s business last month, including its 39% stake in Sky.
At the time, the BBC understood that the deal would not alter the CMA investigation into Fox’s proposed takeover of Sky.
Disney and Fox hope their deal will be completed by the middle of 2019, after the Sky-Fox deal, although it still has to be approved by US regulators.
The CMA said that as a result of the timings, it could not consider the Disney deal when assessing the Sky-Fox deal, but did suggest that its implications could be considered among possible remedies to the transaction.
‘Too much power’
Anne Lambert, chairwoman of the CMA’s independent investigation group, said: “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.”
The process now moves to a three-week public consultation where the CMA will receive responses to its provisional ruling, a spokesman told the BBC.
After that, it will incorporate the responses into a final report, which will be sent to new Culture Secretary Matt Hancock by the middle of May.
He will make the final decision as to whether or not the deal will go ahead.