Rupert Murdoch’s £11.7 billion takeover bid for Sky has been provisionally blocked by the competition watchdog due to fears it would hand the media mogul too much control over UK media.

The Competition and Markets Authority (CMA) said it found that 21st Century Fox’s deal to buy out the remaining 61% of Sky it does not already own was “not in the public interest”.

Its investigation found if the deal went ahead, it would hand the Murdoch Family Trust – which controls Fox and News Corp, the publisher of the Sun and the Times – “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”.

It cleared the deal on the grounds of Fox’s commitment to broadcasting standards, in spite of the phone-hacking scandal at the Murdoch-controlled News of the World tabloid and allegations of sexual harassment at Fox News in the US.

But the CMA said its concerns over the impact on media plurality in Britain meant that overall it believed the deal was against the public interest.

The provisional decision could thwart Mr Murdoch’s plans to take full ownership of Sky for the second time, after the first attempt was abandoned following the phone-hacking saga that led to the closure of the News of the World seven years ago.

It also adds a complication to Walt Disney’s recently agreed 66 billion US dollar (£47 billion) takeover of 21st Century Fox’s entertainment assets, including Sky.

Rupert Murdoch and his family trust would have too much control over UK media, according to the CMA
Rupert Murdoch and his family trust would have too much control over UK media, according to the CMA

The CMA has put forward suggestions for how it believes Fox could address its concerns – including spinning off Sky News, or “behavioural” changes to protect Sky News from direct influence from the Murdoch Family Trust.

Newly appointed Culture Secretary Matt Hancock will then decide whether to block the deal, approve it or approve it with conditions.

Sky News has held an emergency staff meeting and question and answer for employees this morning following the CMA decision.

Sky signalled in a submission to the CMA last year that Sky News faced the risk of closure or being spun-off if media plurality concerns prevented the Fox deal going through.

Fox said it was “disappointed” at the provisional ruling.

The company said it will continue to engage with the CMA ahead of the publication of its final report, which has now been put back to May 1.

It added it still expects regulatory approval of the deal by June 30.

Sky said it “noted” the CMA’s initial findings.

Shares in FTSE 100-listed Sky rose nearly 3% after the provisional ruling in a sign that investors are betting on the deal eventually going through.

The CMA will now consult on its provisional findings and remedies before delivering its final report to the Government on May 1.

Anne Lambert, chairwoman of the CMA’s independent investigation group, said: “Media plurality goes to the heart of our democratic process. It is very important that no group or individual should have too much control of our news media or too much power to affect the political agenda.”

In explaining its provisional decision, the CMA said the Murdoch’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 took into consideration the impending Walt Disney deal and the fact this would “significantly weaken” the link between Sky News and the Murdoch Family Trust.

But it added: “We cannot be sufficiently confident at this stage whether, when, or how the Disney/Fox transaction will complete.”

It is looking at the possibility of a so-called sunset clause, which would mean that actions taken to address concerns fall away if Disney’s takeover goes through.

The CMA said it could also ensure that any actions taken to pass the deal are then reviewed later if the Disney takeover goes ahead.

The watchdog said it noted the recent fears that Sky News could close if the Fox deal is blocked.

But it added: “We do not see why, based on our considerations, Sky would wish to close Sky News in the event of a decision by the Secretary of State to prohibit the transaction as the continued operation of Sky News would be unlikely to represent an obstacle to the Disney/Fox transaction.”

Labour’s deputy leader and shadow culture secretary Tom Watson cheered the CMA’s findings.

He said: “The Competition and Markets Authority is right to say that the Fox takeover of Sky would give the Murdoch family too much power. This is the right decision for the UK.”