Rupert Murdoch's bid to take full control of Sky could be disrupted or blocked completely after the government unexpectedly raised a series of concerns about how Fox News has been run in the US and the potential "Foxification" of the UK broadcaster.
The billionaire had hoped to spend £11.7 billion to take full control of Sky through his 21st Century Fox company, which is controlled by Murdoch and his sons. It already owns 39% of Sky.
Culture secretary Karen Bradley had previously said she was minded to refer the deal to the Competition and Markets Authority on the grounds of media plurality – meaning an investigation would only consider whether or not allowing the Murdochs to take complete control of the broadcaster while owning newspapers such as The Sun and The Times would give them too much influence in public life.
On Tuesday she unexpectedly went even further and said she intended to refer the takeover for further investigation on the grounds that broadcasting standards at Sky could be undermined if the deal went ahead.
"I have the power to make a reference if I believe there is a risk, which is not purely fanciful, that the merger might operate against the specified public interests," she told the House of Commons.
Anti-Murdoch campaigners had lobbied hard to stop the deal, with Labour MPs including Ed Miliband saying the Murdochs are not "fit and proper" owners of the broadcast group. Meanwhile, online lobbying groups bombarded the UK government with details of the sexual harassment allegations at Fox News that resulted in the departure of former station chief Roger Ailes and prominent presenter Bill O’Reilly.
It also shows the potential risks of how the internal culture at one arm of Murdoch's media empire can contaminate deals on the other side of the world.
The culture secretary said she had received 43,000 representations over the summer following her initial statement, few of which added substantial new evidence. However, around 30 letters contained new information that prompted her to ask broadcast regulator Ofcom reinvestigate the issue and report back.
One concern raised was that Sky "did not have adequate compliance procedures in place for the broadcast of Fox News in the UK". Sky preemptively pulled the right-wing US news channel from its UK broadcast slot at the end of August with little warning, saying it was no longer commercially viable.
Bradley told the House of Commons she acknowledged concerns that US-style partisan TV news journalism could come to Britain in some form, despite the UK's strict rules on the impartiality of broadcasters.
"Third parties also raised concerns about what they termed the ‘Foxification’ of Fox-owned news outlets internationally," she said. "On the evidence before me I am not able to conclude that this raises nonfanciful concerns. However, I consider it important that entities which adopt controversial or partisan approaches to news and current affairs in other jurisdictions should, at the same time, have a genuine commitment to broadcasting standards here."
Ofcom concluded Fox News had "procedures which we consider to be inadequate" but advised against widening the scope of the investigation. However, Bradley decided to push ahead regardless, defying the wishes of Murdoch.
Murdoch's last attempt to take full control of Sky was abandoned in 2011 following a lobbying scandal and phone-hacking issues at his News of the World newspaper.
Bradley has 10 days before her decision is finalised and the deal could still be given the go-ahead. However, any successful transaction is now likely to require months of painstaking questioning regarding governance issues at Fox News, which could be potentially embarrassing for the Murdoch family.
The move prompted delight from Labour MPs, especially shadow culture secretary Tom Watson.
"I think it's the first time a minister in the current government has ever stood in the way of what the Murdochs want, and frankly not before time," he said.