Rupert Murdoch's 21st Century Fox must wait for further progress on its bid to buy Sky after the U.K. government said it needed more time to weigh its next move.
The U.K. will decide in coming weeks whether to send the 11.7 billion pound ($15.2 billion) bid for a six-month regulatory review, Culture Minister Karen Bradley told lawmakers Thursday in Parliament. Bradley said she may announce her decision during the body's summer recess, which starts Thursday and ends in early September, breaking with tradition to expedite the process.
The possibility of an announcement during the break drew protests from opposition politicians, highlighting the pressure being brought on Bradley, a member of the ruling Conservative Party, by the Murdochs and their detractors. Bradley said she was still inclined to refer the deal to the Competition and Markets Authority for an investigation into the Murdoch family's media influence, and left open the chance of a wider probe revisiting their past corporate-governance failings.
"My final decision on referral can only be made after I have fully considered all relevant evidence on both the plurality and commitment to broadcasting standards grounds," Bradley said. "I am currently still minded to refer on the media plurality ground and still minded not to accept the undertakings in lieu of a referral," she said, referring to concessions that Fox has offered to gain approval for the takeover.
The stakes are high for a Conservative government that was weakened in a general election in June. The party, whose stance toward Brexit negotiations initially alienated business leaders, is now trying to woo them. Fox Chief Executive Officer James Murdoch and co-Chairman Lachlan Murdoch warned Bradley last week that any delay would signal to other companies that the U.K. wasn't open for business as the country leaves the European Union.
"In light of the transaction's benefits to the U.K. creative economy, we would urge the Secretary of State to complete the regulatory process expeditiously," Fox said in a statement Thursday.
Fox wants a prompt decision so it can press ahead with a deal that would unite the Murdoch family's transatlantic media empire. Further delays are also potentially costly -- Sky is on the hook to pay a 170 million-pound dividend to shareholders if the deal doesn't close by year-end. If the deal fails altogether, Fox must pay Sky 200 million pounds.
"Businesses require a level of certainty in order to plan and invest," Sky said in a statement, urging Bradley to act swiftly on a deal that was announced almost eight months ago. "As such we are disappointed by this further delay."
Prospects for the deal have changed quickly, as a disruptive U.K. general election, a drumbeat of sexual and racial harassment allegations at Fox's U.S. networks and pushback from regulators have slowed its progress. In December, the Murdochs proposed buying the 61 percent of Sky not already owned. On a conference call then, Lachlan Murdoch predicted a smooth path toward approval by the end of 2017 with no meaningful concessions.
Fox's lawyers wrote to Bradley this week discouraging her from going back on a preliminary decision in June to limit the Competition and Market Authority's probe to examining the Murdochs' influence over U.K. media. Opponents are trying to reopen another line of inquiry, which would allow for the family's corporate-governance failings to be re-explored.
That would open the door for opponents to dredge up the voicemail hacking that doomed a previous attempt to buy Sky in 2011, and evidence from lawsuits and investigations in the U.S. related to harassment allegations at Fox News and Fox Business.
"Whatever decision she makes, there is a strong possibility of judicial review by one side or the other," said Tom Watson, deputy leader of the Labour Party, while arguing that Bradley should wait until Parliament is back in session before announcing her referral decision. "No doubt that has influenced her decision to tread carefully and slowly, and we respect her for that."
-- Bloomberg News