Photographer: Simon Dawson/Bloomberg

Fox-Sky Deal Faces Further Delay

  • Comments ‘raise new evidence’ on initial Ofcom deal review
  • Ofcom has until Aug. 25 to clarify questions about its report

21st Century Fox Inc.’s plan to buy pay-TV broadcaster Sky Plc was hit by a further delay as the U.K. ministry overseeing the deal said it needed more information after receiving feedback about the case, which is already behind schedule.

The Department for Digital, Culture, Media and Sport has asked communications regulator Ofcom to clarify some points in its original review of the 11.7 billion-pound ($15.2 billion) deal, according to a statement posted Tuesday on the department’s website. The DCMS said comments it’s gotten raise new evidence.

The request suggests opponents of the deal have made headway persuading Culture Secretary Karen Bradley to listen to objections they’ve raised over Ofcom’s report. Bradley must decide whether to refer the deal to the Competition and Markets Authority for further review that could last six months, and if so, on what grounds. The ministry asked Ofcom to clarify parts of its report by Aug. 25.

“Any referral decision by the secretary of state must be taken on the basis of a valid assessment of all the relevant evidence,” DCMS said in the statement.

Sky’s shares fell as much as 1 percent to 960 pence on news of the delay, the biggest drop in three weeks. Sky was down 0.8 percent to 961.5 pence at 4:51 p.m. in London.

Critics of the deal such as former Labour leader Ed Miliband, current Liberal Democrat chief Vince Cable and political advocacy group Avaaz have made submissions to Bradley arguing that Ofcom’s initial review of the merger was flawed.

In its June report, Ofcom recommended Bradley start a further probe into whether the deal would give Rupert Murdoch and his family too much influence over U.K. media, but cleared Fox on its commitment to broadcasting standards.

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Murdoch’s opponents have threatened Bradley with a legal challenge if she doesn’t also call for an investigation on broadcasting standards, in light of recent revelations of alleged misconduct at Fox News and an allegedly flawed approach by Ofcom.

“This issue of whether to refer or not on broadcasting standards is probably causing quite a lot of headache,” said Alice Enders, head of research at Enders Analysis. “She has to be especially careful and will really want to get good external legal advice,” Enders said, referring to Bradley.

The request for further information from Ofcom effectively rules out Bradley making her next move before Parliament returns from its recess on Sept. 5, Enders said.

“You can bet your bottom dollar that DCMS is not going to get through all this evidence in 24 hours, or even a week,” she said.

Delays to the process are potentially costly to Sky, which must pay a special dividend of about 170 million pounds to its shareholders if the takeover does not complete by Dec. 31.

“Ofcom took a ‘see no evil, hear no evil’ approach to investigating the Murdochs, and Bradley is beginning to see just how flawed that approach was,” said Alaphia Zoyab, a senior campaigner for Avaaz. “She should push for a deeper probe, and she knows that if she doesn’t a legal challenge is possible.”

Sky and Fox both declined to comment.

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