British broadcaster Sky’s shares tumbled today as analysts suggested its takeover by 21st Century Fox could be hindered by the General Election result.
Culture secretary Karen Bradley referred the deal to Ofcom and the Competition and Markets Authority (CMA) in March. The deadline was pushed back from 16 May to 20 June because of yesterday’s General Election.
Ofcom will share opinions on what the deal would mean for media plurality, broadcasting standards and give its take on whether Fox would make a “fit and proper” owner. Bradley will then make a decision on the deal with this guidance in mind.
“Had the Conservatives won a large majority, we think it would have been more straightforward to approve the deal relatively quickly but as we have discussed earlier we note that Labour MPs have been vocal in their opposition to the Fox/Sky deal,” said UBS analyst Polo Tang.
“With the Conservatives remaining the largest party, we still see scope for the deal to be approved but the risks around an extended review have increased with potential for the deal to go to an in depth review with the CMA or lengthy discussions with the secretary of state over remedies/undertakings.”
Sky’s shares dropped three per cent at the open today, to 959p, but recovered later in the day and are down 1.5 per cent to 973p at the time of writing.
Rupert Murdoch’s 21st Century Fox agreed an £11.7bn deal to buy the 61 per cent of Sky it does not already own last December.