NWSCD Newscorp B Voting

By Stu Woo 

British antitrust regulators said Tuesday that 21st Century Fox Inc.'s proposed $15.5 billion acquisition of the 61% of U.K. pay-TV giant Sky PLC that it doesn't already own would be against public interest, saying it would give the Murdoch family too much influence in British media.

The determination raises the biggest hurdle yet in Mr. Murdoch's efforts to consolidate ownership of the broadcaster. While it is preliminary and not binding on the government, which must approve the deal, it could also scramble the calculations in Walt Disney Co.'s separate $52 billion deal to buy many of Fox's assets, including Sky.

Technically, the determination shouldn't affect the terms of the Disney-Fox deal. But Sky was one of the jewels in the portfolio of assets that Disney is buying from Fox. Should the government block the Fox-Sky deal, Disney would then have to initiate a new bid for the rest of Sky to take 100% control, assuming the Disney-Fox transaction is approved separately. It is unclear if Disney would feel it needs to consolidate its Sky ownership.

The regulator said any eventual Disney move to consolidate ownership could face less scrutiny, and be easier to pull off. If Disney succeeded in its bid for the Fox assets, it would "significantly weaken" the link between the Murdoch family and Sky. It said the Disney deal to buy the Fox assets would be subject to its own regulatory review.

The regulators also listed possible remedies, include spinning off Sky News, Sky's news channel. Sky had said it might shutter the business anyway. The likelihood of Fox agreeing to any significant remedies is low, however, given the pending Disney deal.

Britain's Competition and Markets Authority said Tuesday that Mr. Murdoch already holds significant influence in the British media through News Corp, which publishes widely read U.K. newspapers, including the Times, the Sunday Times and the Sun. Mr. Murdoch and his family are major shareholders in News Corp, which also publishes The Wall Street Journal.

Mr. Murdoch and his family are also major shareholders of Fox.

British regulators said acquiring 100% of Sky, a cable provider that also runs its own news channel, would give the Murdoch family "greater influence over public opinion and the political agenda through Sky News, and would add to the ... already significant influence over public opinion and the political agenda through its control of the News Corp titles."

In a statement, Fox said that "we are disappointed by the CMA's provisional findings. We will continue to engage with the CMA ahead of the publication of the final report in May." Fox also said it was pleased it passed the regulator's other test, of whether Fox was committed to British broadcasting standards.

Tuesday's report was preliminary. The authority will publish a final report in May, which will be passed on as recommendations to the British culture secretary, who can approve the Sky transaction, reject it or approve it with conditions.

Fox said Tuesday that it expects the deal to be closed by June.

Write to Stu Woo at Stu.Woo@wsj.com

(END) Dow Jones Newswires

January 23, 2018 03:54 ET (08:54 GMT)

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