For the second time in six years a proposed merger between a Murdoch family-controlled business and Sky (SKY) will face scrutiny from UK regulatory officials. Secretary of state for culture, media and sport Karen Bradley has asked Ofcom and the Competition Markets Authority (CMA) to assess the £11.7bn takeover bid from Twenty-First Century Fox (US: FOXA) on the grounds of "media plurality and commitment to broadcasting standards". Separately, Ofcom is investigating whether Sky and its chairman, James Murdoch, are 'fit and proper' to own a UK broadcasting licence.
Fox is looking to buy the remaining 61 per cent of Sky it does not own. The deal, which offers Sky's shareholders 1,075p a share, was first touted in December last year. Ms Bradley told the House of Commons that she had received "over 700 representations from third parties" in reference to the deal, the majority of which supported government intervention.
News Corporation (now Twenty-First Century Fox) tried to gain full control of BSkyB in 2010 - approved by Ofcom subject to certain conditions. But it was abandoned amid the phone-hacking scandal at now-defunct paper News of the World. However, some circumstances surrounding the deal are different this time.
1. New News Corp
In 2013 Rupert Murdoch split News Corporation into two businesses: Twenty First Century Fox and News Corp. The former to take on the broadcasting parts of the business, including Fox News, and the latter to house the publishing arm with its British papers including The Times and The Sun.
One of the conditions set by Ofcom in 2011 was that Sky News be spun out into a separate company to restrict the Murdoch family's control over British media outlets. Now the family have argued that having split News Corp they should be allowed to keep Sky News.
However, a media policy briefing compiled by experts from three London universities has warned of the political influence that can be caused by a single corporate owner. "This is certainly true of News Corporation and Rupert Murdoch," the report said.
2. Politics of the media
Media plurality has fallen under greater scrutiny, as the media was widely cited as having played an important role in recent political decisions. 'Fake news', the role of the internet in the provision of news and criticism of the impartiality of Fox News are new issues that Ofcom will have to consider.
But the regulator's primary responsibility is to ensure a range of viewpoints across media enterprises. Therefore, the overriding question from the investigation remains the same as last time; will a Fox-owned Sky News give the Murdoch's too much power when it is combined with its newspapers?
Then again, former secretary of state for culture, media and sport John Whittingdale thinks it is important to allow the takeover to go ahead as it proves the UK is still open for business post-referendum.
3. Competitive landscape
Fox argues its bid should not be blocked because the rise of online news means there is much more choice for consumers. Facebook and Google are among the top 10 news outlets in the UK, while daily newspaper circulation has fallen almost 40 per cent since 2010.
But academics from the London School of Economics argue the use of social media for news does not reveal anything about plurality as "the technology platforms do not produce news themselves".
From Sky's perspective, competition is also fierce. In the last few years the group has ramped up spending on its content to fend off competition from new Pay-TV companies such as Netflix and Amazon Fire. For Sky it could be beneficial to gain access to Fox's extensive content.
4. Too little time
Karen Bradley has given Ofcom 40 working days to come to a conclusion on the takeover. That's a far cry from the last review, which took 15 months to reach a conclusion. Shadow secretary for culture, media and sport Tom Watson has expressed concern that this time frame is too short and will prevent Ofcom completing its review properly.
