The Murdoch family’s proposed £11.7bn takeover of Sky has been referred to the Competition and Markets Authority for further investigation.
The culture secretary, Karen Bradley, told the House of Commons of the decision two days after signalling her intention to pass the deal to the competition watchdog for six months of in-depth scrutiny.
The CMA will consider not just the proposed deal’s effect on media plurality, but also the Murdochs’ commitment to broadcasting standards.
The Murdochs’ 21st Century Fox and Sky, which had been given 10 days to respond, said they would not be making “substantive representations” about Bradley’s decision.
“I can confirm my final decision is to refer the merger to the CMA for a phase 2 investigation on media plurality and genuine commitment to broadcasting standards grounds,” said Bradley.
“I will issue and publish my formal referral decision in the coming days. I will also publish the substantive representations I have received during this process shortly.”
Once the CMA has completed its investigation it will advise Bradley, who will then take a final decision on whether the merger can proceed. She could also attach conditions that would apply if 21st Century Fox wants to complete the deal.
It had been expected that Bradley would order an inquiry by the competition regulator on the grounds of media plurality.
But the minister in effect overruled Ofcom, the media regulator, in also calling for a broadcasting standards investigation after misconduct allegations at Fox News in the US.
In a statement to the stock market, 21st Century Fox said: “Yesterday we wrote to the secretary of state expressing disappointment that she had changed her mind and decided not to follow the advice of the independent and expert regulator Ofcom regarding broadcasting standards, but informing her that we did not intend to make further representations and encouraged her to make a prompt referral.
“We now, therefore, look forward to engaging constructively with the CMA, as an independent authority, and hope that the findings of this process will be respected by the secretary of state.”
Correspondence between Bradley and Ofcom revealed that the minister had raised concerns about both a string of sexual harassment allegations at Fox News and claims that the broadcaster had colluded with the White House on a discredited story alleging that a murdered Democrat aide, Seth Rich, was the source of leaked emails.
Fox is controlled by Rupert Murdoch and his sons Lachlan and James. If the Fox bid is successful and it takes ownership of all of Sky then the satellite broadcaster will join the Sun, the Times and talkRadio in the Murdochs’ wider British media empire, giving the family a bigger reach than any news provider apart from the BBC.
“The Murdochs have finally had to concede the investigation they dreaded,” said Alex Wilks, campaign director of the activist group Avaaz. “Now the CMA must use their extensive powers to dig up the Murdochs’ darkest secrets. The truth will stop this takeover.”
In a short statement to the stock market, Sky said: “We note the swift decision to now refer this to the CMA and will continue to engage constructively in this process.”
The CMA said it was “due to receive the formal written referral in the coming days. On receipt of the formal written referral the CMA will open an investigation. No action will be taken until this referral is officially received.”