Fox's proposed $15 billion takeover of Sky is not in the public interest as it would have too much influence over U.K. media, according to provisional findings from U.K. regulator the Competitions and Markets Authority (CMA), published Tuesday. The Murdoch Family Trust (MFT) controls Fox.
But if Disney does go ahead and buy parts of Fox, including its movie studios, TV networks and streaming service Hulu, as well as Fox's 39.1 percent of Sky, then there would be no such concerns, the regulator said.
"The Disney/Fox transaction, if completed, would significantly weaken the link between the MFT and Sky, which is at the root of our provisional concerns about media plurality. Consequently, on the face of it, these concerns would fall away if the Disney/Fox transaction went ahead as announced," an online document published by the CMA said.
The MFT controls Fox as well as News Corporation, which publishes U.K. newspapers The Times and The Sun. If it wholly-owned Sky, it would have media influence that is not in the public interest, the CMA said. "It would have too much control over news providers in the U.K. across all media platforms (TV, radio, online and newspapers), and therefore too much influence over public opinion and the political agenda," its provisional findings stated.
The CMA was also investigating the deal on the grounds of commitment to broadcasting standards in the U.K. but concluded that Fox has "a genuine commitment" to such standards. In 2011, the MFT-owned News of the World newspaper was closed after a hacking scandal that led to more than 40 arrests and the prosecution of News Corporation employees, but the CMA found that it has since complied with press standards and the law.
The CMA's investigation also found that recent allegations of sexual harassment against Fox News staff in the U.S. did not call into question Fox's or the MFT's commitment to broadcasting standards in the U.K.
Disney announced the $52.4 billion deal to buy Fox assets in December. The acquisition will need to pass scrutiny by the U.S. Department of Justice before it goes ahead, and this may not happen before the CMA's investigations are complete. The CMA is seeking responses on whether Disney's acquisition of 21st Century Fox will address its concerns, and it has to complete its inquiries by May 1.
21st Century Fox welcomed the CMA's findings that it had a commitment to broadcasting standards but said it was disappointed with its decision on plurality. "We will continue to engage with the CMA ahead of the publication of the final report in May," it said in an online statement.
Disclosure: Comcast, which owns CNBC parent NBCUniversal, is a co-owner of Hulu.