Yes, Fox News' sexual harassment scandals were an issue.
The decision by the U.K. government to continue to study Twenty-First Century Fox Inc.'s (FOXA) - Get Report bid to own all of European satellite TV and internet provider Sky plc puts the spotlight back on the sexual and discrimination scandals that have rocked the Fox News Channel for the past 12 months.
For Rupert Murdoch and his sons, who control the global media and entertainment company, the decision by British culture minister Karen Bradley to refer the transaction to antitrust authorities is hardly encouraging news. Fox was hoping to get approval on Thursday, June 29, for its proposed $15.2 billion acquisition of the 61% of Sky Fox doesn't already own.
The Murdochs, who were thwarted three years ago in their attempt to buy Time Warner Inc. (TWX) , are eager to control Sky, thereby vertically integrating their European business from content creation through distribution.
But the Office of Communications, the regulator known as Ofcom, said company executives exhibited "significant corporate failures" tied to the sexual harassment and discrimination lawsuits that led to the dismissal in July 2016 of Fox News co-founder Roger Ailes and the departure of its biggest on-air personality, Bill O'Reilly, in April. Lawyers for current and former Fox News employees had pressed U.K. regulators to reject the Sky deal.
The culture minister said regulators also would study whether the Sky acquisition would afford the Murdochs' outsized influence given the potential for their media empire to have even greater reach within the country.
"The transaction may increase members of the Murdoch Family Trust's ability to influence the overall news agenda and their ability to influence the political process," Bradley said in a statement.
Though Fox investors might have been expecting U.K. officials would make a final decision on the deal, the transaction is far from dead. Fox and Sky still have an opportunity to convince the culture secretary not to refer the proposed deal to antitrust authorities, and authorities did say that Fox's buyout of Sky would conform to local broadcasting standards.
Additionally, the European Commission approved the Sky deal in April, and Irish regulators approved the transaction earlier this week. Fox especially can take heart in the much-watched wording that the regulator said the Murdochs would be considered "fit and proper" to hold broadcasting licenses if the deal were approved.
In a statement Thursday, Fox said, "While we welcome [Bradley's] decision on broadcasting standards, we are disappointed that she does not accept Ofcom's recommendation stated in its report that '....the proposed undertakings offered by Fox to maintain the editorial independence of Sky News mitigate the media plurality concerns.'"
The company said it "will continue to work constructively with the U.K. authorities. In the event that [Bradley] makes a final decision to refer to [regulator Competition and Markets Authority], we would expect that the review would take at least 24 weeks. In such an event, the transaction is expected to close by June 30, 2018."
Fox's shares were up 1.4% on Thursday morning to $28.51.
While the Murdochs are best known in the U.S. for their Republican-friendly cable TV news network, opinions in the U.K. tend to be even more passionate and divisive. Rupert Murdoch, 86, is still well-known for his battles against print and mining labor unions, as well as his ardent support for late right-wing Prime Minister Margaret Thatcher.
In more recent years, the Murdochs sparked public outrage when their newspaper News of the World was found to have hacked the phone of a murdered schoolgirl as well as phones owned by celebrities and members of the royal family. The hacking scandal prompted the Murdochs to withdraw an initial bid to acquire Sky in 2011.
The past 12 months have been a trying experience for Fox. Ailes's dismissal and subsequent death in May due to complications caused by a fall in his Palm Beach, Fla., home have forced a series of internal changes within the network, long a primary source of profit for the Murdochs.
Yet despite the scandals, Fox News hasn't lost much ground against its main rivals, Time Warner's CNN and Comcast Corp.'s (CMCSA) - Get Report MSNBC. In fact, its sister network, Fox Business Network, has drawn even or better against longtime leader CNBC, also owned by Comcast.
Fox Business said this week that it has topped CNBC for three straight quarters among daytime viewers, the first time it's enjoyed such a run since launching in 2007.