Murdoch’s Sky bid faces new hurdle

Review may probe media concentration

LONDON • Rupert Murdoch faces drawn-out negotiations with U.K. regulators in his effort to take full control of for 11.7 billion pounds (US$15.2 billion) after the government said it intended to refer the bid back for additional review unless 21st Century Fox Inc. offers steeper concessions.

The U.K. is inclined to refer the offer to the Competition and Markets Authority, Culture Secretary Karen Bradley said Thursday. However, she left the door open for a resolution by July 14 that would avoid a CMA review, if Fox strengthens proposals to ensure editorial independence at Sky News.

“The transaction raises public-interest concerns as a result of the risk of increased influence by members of the Murdoch family trust over the U.K. news agenda and the political process, with its unique presence on radio, television, in print and online,” Bradley said to the House of Commons.

While the onus is on Murdoch to resolve government’s concerns, investors drove Sky shares up, concluding Bradley raised no fundamental issues that would preclude the 86-year-old billionaire’s attempt to create a trans-Atlantic media and entertainment giant. While harassment allegations at Fox News in the U.S. demonstrated corporate-governance failures, she said she wasn’t inclined to ask the CMA to look into the deal’s impact on broadcast standards.

Communications regulator Ofcom echoed her findings, saying Sky would remain a fit-and-proper owner of media assets under Fox, a key test that could have sunk the deal outright.

“It’s taken the worst-case scenario off the table,” said Neil Campling at Northern Trust Capital Markets. “The balance of probability is now that it’s more likely that the deal goes through.”

Sky shares advanced 3.2 per cent in early afternoon trading in London, the biggest gain since the deal was announced in December. Representatives of Sky and Fox, which now owns 39 per cent of its intended target, didn’t immediately respond