Rupert Murdoch’s planned takeover of Sky (LON:SKY) has suffered a setback as the Competition and Markets Authority (CMA) ruled that the deal was not in the public interest. The news comes after Murdoch’s Twenty-First Century Fox recently inked a deal with Disney to sell some of its assets, including its holding in the London-listed group.
Sky’s share price has reacted positively to the news, having rallied 2.40 percent to 1,027.08p as of 10:14 GMT. The shares are outperforming the benchmark FTSE 100 index which currently stands 0.30 percent higher at 7,738.23 points.
CMA to block Sky deal
CMA published its provisional findings from its in-depth review of 21st Century Fox’s proposed acquisition of Sky, saying that it had found out that “if the deal went ahead, as currently proposed, it is likely to operate against the public interest”. The watchdog explained that the proposed tie-up would lead to the Murdoch Family Trust, which controls Fox and News Corporation, increasing its control over Sky, “so that it would have too much control over news providers in the UK across all media platforms […] and therefore too much influence over public opinion and the political agenda”.
The CMA has set out a series of potential options, including insulating Sky News from Murdoch Family Trust as well as blocking the deal outright.
Twenty-First Century Fox said that it was disappointed by provisional findings, and that it will continue to engage with the CMA ahead of the publication of its final report in May. The company expects approval of the deal by June 30.
Analysts weigh in
“For us, a structural remedy such as the spinning off or divesting of Sky News would present the easiest path to deal completion,” Neil Campling at Mirabaud Securities, told Reuters. “It is only on plurality grounds that the CMA has concerns, and that is a fixable situation as per the olive branches being offered through a range of potential remedies.”