Sky shares rise after watchdog rules takeover by Rupert Murdoch's Fox not in public interest

While the CMA’s decision will come as a blow to Mr Murdoch, whose 21st Century Fox already owns 39 per cent of Sky, it is not fatal to a deal

Deal risked handing the Murdoch family too much control over the British media, regulator says (Getty)

Shares in Sky rose on Tuesday after the competition watchdog declared that a takeover by Rupert Murdoch’s 21st Century Fox would not be in the public interest.

A statement issued by the Competition and Markets Authority said it had provisionally ruled against Fox taking full control of the broadcaster because the deal risked handing the Murdoch family too much control over the British media.

Despite that, Tuesday’s announcement was apparently more positive than markets had been expecting, causing shares to rise 2.25 per cent to 1,026p.

While the CMA’s decision will come as a blow to Mr Murdoch, whose 21st Century Fox already owns 39 per cent of Sky, it is not fatal to a deal.

There was a risk of the CMA seeking to block the deal on broadcasting standards grounds, in light of recent sexual harassment allegations at his Fox News organisation in the United States, as well as a history of phone-hacking and other problems in his media empire. Such a declaration by the CMA could have ended any prospect of a takeover.

The ruling did not set out possible remedies that could allow the £10.7bn deal to go ahead, including Mr Murdoch spinning off or divesting from Sky News, or insulating it from Fox’s influence.

Fox itself could soon be taken over by Disney but that proposed deal is subject to regulatory approval in the US.

In a statement, the watchdog said: “The CMA has provisionally found that if the deal went ahead, as currently proposed, it is likely to operate against the public interest.”

“It would lead to the Murdoch Family Trust (MFT), which controls Fox and News Corporation (News Corp), increasing its control over Sky, so that it would have too much control over news providers in the UK across all media platforms (TV, Radio, Online and Newspapers), and therefore too much influence over public opinion and the political agenda.

“The MFT’s news outlets are watched, read or heard by nearly a third of the UK’s population, and have a combined share of the public’s news consumption that is significantly greater than all other news providers, except the BBC and ITN.”

The CMA said it would welcome responses to the decision from “interested parties”, before its report is finalised and handed to Secretary of State for Digital, Culture, Media and Sport, Matt Hancock, by 1 May for a final decision.

Tom Watson, deputy leader of the Labour Party and a prominent Murdoch critic, called the ruling the “right decision for the UK”.