Sky/21st Century deal likely to be referred for full investigation

Broadcaster Sky's £11.7bn takeover by 21st Century Fox will likely be referred to the Competition and Markets Authority for a full investigation.

Culture Secretary Karen Bradley said on Thursday that she was minded to ask the CMA to launch a detailed assessment of the impact of the deal on media plurality after receiving a report by media regulator Ofcom. The competition watchdog will report its findings within six months.

As far as commitments to broadcasting standards are concerned, the Secretary of State said she is not minded to refer the case for further investigation.

Bradley told the House of Commons: "On the basis of Ofcom’s assessment, I confirm that I am minded to refer to a Phase 2 investigation on the grounds of media plurality.

"The reasoning and evidence on which Ofcom’s recommendation is based are persuasive. The proposed entity would have the third largest total reach of any news provider - lower only than the BBC and ITN - and would, uniquely, span news coverage on television, radio, in newspapers and online.

"Ofcom’s report states that the proposed transaction would give the Murdoch Family Trust material influence over news providers with a significant presence across all key platforms."

Bradley is now required by legislation to allow the parties the opportunity to make representations to her on this position before she reaches a final decision. She has given them until Friday 14 July to respond.

Sky said it will continue to engage with the process as Bradley reaches her final decision.

"In the meantime, Sky welcomes today's announcement of Ofcom's decision that Sky would continue to be a fit and proper holder of its broadcast licences under full ownership of 21CF and will continue to operate its business as usual."

Fox, which already owns 39.1% of Sky, has offered to buy the remaining shares for £10.75 in cash.

Olivetree Financial said: "There still exists a real chance this goes into Phase II, but there remains a not insignificant chance that this can be remedied through undertakings in lieu. On our numbers the deal is pricing a 60/40 chance of completion. We accept that if this goes to phase II we will have to endure further uncertainty around a change of government and perhaps further misdemeanours from Fox that goes to Fit and Proper. But today’s statement gives a strong indication that there is pathway to completion and a chance that this could conclude without a phase II process."

At 1400 BST, Sky shares were up 4% to 983.50p.