UK Regulator Provisionally Rules Fox Acquisition of Sky Against Public Interest

Britain's competition regulator has said 21st Century Fox's £11.7billion takeover of Sky is not in the public interest because it would give Rupert Murdoch too much influence.

It would "significantly weaken the link between Sky News and the Murdoch family" and "could address the concerns set out in our provisional findings", the watchdog said.

Does this mean the deal is dead?

Media plurality was only one part of the CMA investigation. The nuclear option is to stop the deal.

Sky News has been on air for nearly three decades and has viewers across Britain and other parts of the world, claiming to reach over 100 million viewers worldwide. Whatever the potential remedies outlined by the CMA the reality is that the only way to guarantee the editorial independence of Sky News and check Murdoch's power is to block the bid.

This either suggests the market thinks the CMA's objections can be overcome or it might force Disney, now engaged in a bid to buy Fox's entertainment assets (including its 39% stake in Sky), to launch its own separate, higher bid for Sky. The news comes after Murdoch's Twenty-First Century Fox recently inked a deal with Disney to sell some of its assets, including its holding in the London-listed group. Disney will also assume the USD13.7 billion in Fox debt taking the total deal value to USD66.1 billion. If the deal went ahead, the Murdoch's would control Fox and News Corp, the Sun and the Times.

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"Sky is a good brand".

However, that deal is unlikely to be completed before Britain's review of the Sky deal is wrapped up.

Such a move would be political dynamite - critics have already accused Murdoch of using Sky News and its staff as "pawns" to coerce regulators and the government. According to a recent media report, Sky has signaled it would offer to make concessions on Sky News, such as putting it in the hands of an independent trust. "As such, the CMA's analysis of the Fox/Sky transaction can not take it into account in its assessment of the transaction but implications of the Disney transaction in relation to remedies is considered in the notice of possible remedies".

Fox released a statement saying it welcomed the decision over broadcasting standards, but was "disappointed" by the CMA's reading of the media plurality issue. He tried to buy the remaining piece in 2010, but abandoned the deal after News Corporation (which is now 21st Century Fox) was swept up in a hugely damaging phone hacking scandal.

"We also note that the CMA has elected to avail itself of the statutory 8-week extension, moving its deadline for a final decision to 1 May, 2018". Should the sale go ahead as expected, the CMA said its concerns would "fall away". He does not have to abide by the CMA's final decision.

Rupert Murdoch is a man accustomed to getting his own way. This was previously seen as a major obstacle to the deal progressing.

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