Britain's competition regulator said Rupert Murdoch buying all of Sky was not in the public interest because it would give the media mogul too much influence, but set out possible remedies that could allow the $15 billion deal to go ahead.
The initial ruling complicates a plan by Walt Disney Co to buy many of Murdoch's assets, including the pan-European satellite business Sky. Disney had hoped that Murdoch would have taken full control of Sky by the time the U.S. group completed its takeover.
But Britain's Competition and Markets Authority said on Tuesday that the deal as proposed went against the public interest because it would give the Murdoch family too much control over the provision of news.
The CMA said possible ways to resolve its concerns about Murdoch's influence in Britain could include spinning off or divesting Sky News, or insulating Sky News from Fox's influence. A third option is to block the deal outright.
It did however clear Murdoch on the issue of broadcasting standards, saying that recent allegations of sexual harassment at his Fox News organization in the United States did not call into question his commitment to upholding standards in Britain.
The government, which will make the final decision on the takeover, will now receive the regulator's judgment on the takeover on May 1, which is later than expected.