UK government likely to refer Fox's Sky deal to regulator

LONDON (Reuters) - Rupert Murdoch's planned takeover of European pay-TV group Sky SKYB.L is likely to be investigated to see whether it is in the public interest, the British government warned on Friday.

File Photo: Rupert Murdoch, Executive Chairman News Corp and Chairman and CEO 21st Century Fox speaks at the WSJD Live conference in Laguna Beach, California October 29, 2014. REUTERS/Lucy Nicholson

Murdoch's U.S. business Twenty-First Century Fox FOXA.O, which owns 39 percent of Sky, officially notified the European Commission of its 11.7 billion pounds ($14.3 billion) offer to buy the rest of Sky and kicked off what is likely to be a politically charged process.

Media Secretary Karen Bradley said she was likely to intervene to see if any one company would control too much of Britain’s media, and whether the new owners would have a genuine commitment to broadcasting standards.

The deal, announced in December, came five years after a political and criminal scandal at Murdoch’s British newspaper business derailed an earlier bid.

Shares in Sky were flat after the news.

Fox said it had anticipated that regulators would undertake a thorough review of the transaction, and it looked forward to engaging with them.

“We believe the combination of 21st Century Fox and Sky will create a company best suited to compete in a rapidly evolving industry, and are confident that the transaction will be approved based on a compelling fact set,” the U.S. company said.

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The Murdoch family has long wanted to control Sky, which has operations in Germany and Italy as well as Britain, to unite a media empire across two continents.

Some opposition lawmakers have already voiced their concern, saying Murdoch, the owner of The Times and The Sun newspapers, would wield too much power if he had full control of a pay-TV group present in more than 12 million British and Irish homes.

Labour’s deputy leader Tom Watson, a long-time critic of Rupert Murdoch, said the government should have referred the bid to the media regulator Ofcom immediately.

“It is clear that Fox’s bid to take full control of Sky will significantly increase the size of the biggest media organisation in the UK and further concentrate power in the hands of a dominant industry player,” he said.

Murdoch’s son James, who is CEO of Fox and chairman of Sky, has said he expects the deal to pass regulatory muster.

He said the media environment had radically changed in the last five years, giving consumers more choice than ever before in the TV market.

The notification to Brussels gives Britain’s Department of Media 10 working days to give its final verdict on whether the bid should be scrutinised by Ofcom.

Bradley said she had invited representations from the companies involved, and would aim to come to a decision before 17 March.

The European Commission will separately examine whether the deal hurts competition. It said it would decide by April 7 whether to clear it, demand concessions or begin a five-month investigation.

It approved the 2011 deal, although in the interim period Rupert Murdoch’s print and television businesses have been split into two companies, and Sky has acquired Sky Italia and Sky Deutschland.

Additional reporting by Kylie MacLellan and Foo Yun Chee; editing by Elaine Hardcastle