Fox-Sky hits snag as CMA says Murdoch gets more power

Bloomberg

UK regulators dealt a setback to 21st Century Fox Inc.’s planned 11.7 billion-pound ($16.3 billion) takeover of Sky Plc, saying the deal would give Rupert Murdoch too much control over the country’s media.
Fox’s bid to buy the European pay-TV broadcaster wouldn’t be in the public interest, the Competition and Markets Authority said in provisional findings on Tuesday in which it called for the companies to offer remedies.
Sky shares jumped as much 3.7 percent, however, after the regulator dismissed concerns about the separate issue of broadcasting standards.
While the decision is another impediment for the Murdochs, the lack of concern over broadcasting standards was welcomed by Fox after myriad regulatory delays and a furor over sexual harassment allegations at Fox News in the US. With a 39.1 percent stake in Sky, Fox has agreed to sell the London-based broadcaster on to Walt Disney Co. as part of a a $52.4 billion merger revealed last month. If the Fox-Sky deal isn’t completed, Disney will only pick up Fox’s existing holding in Sky.
Broadcasting standards would “probably have been the harder of the two parts for Fox to provide sufficient remedies,” Liberum media analyst Ian Whittaker wrote in a note.
Now the Murdoch family faces negotiations with antitrust officials and politicians to get the Sky deal through, with the aim of ultimately selling the company on to Disney. Any concessions could include divesting Sky News or insulating the channel from Murdoch’s influence, the CMA said. Fox said in a separate statement that it was disappointed with the CMA’s findings on media plurality.
“We will continue to engage with the CMA ahead of the publication of the final report in May,” Fox said.
The CMA rebuke to Murdoch comes even though Sky is likely to be absorbed by Disney as part of the US company’s own transaction within months of the completion of the Fox deal. But the regulators said that they couldn’t take the second merger into account.