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Fox Still Expects Sky Takeover to Go Through, but Opponents Rejoice

21st Century Fox said Tuesday it remained confident of achieving British government approval of its proposed takeover of Sky, but campaigners against the deal rejoiced at the U.K. competition watchdog’s warning that it would weaken media plurality and undermine the public interest.

“A landmark finding by the Competition and Markets Authority,” former Labour Party leader Ed Miliband tweeted Tuesday. “The Sky deal would give the Murdochs too much power. Finally a regulator says No to the Murdochs.”

After months of review, the competition authority said in a preliminary report Tuesday morning that Fox’s $15-billion takeover bid for Sky would concentrate too much media power in the hands of the Murdoch family, which would own Sky News, the Times of London newspaper, and the mass-market tabloid The Sun.

“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,” said Anne Lambert, chairwoman of the Competition and Markets Authority’s investigation group. The Fox-Sky merger as currently proposed “would result in the Murdoch family having too much control over news providers in the U.K., and too much influence over public opinion and the political agenda.”

The findings issued Tuesday by the competition authority are provisional, however. In the report, the authority suggested that Fox might be able to answer some of its concerns over media plurality by spinning off Sky News or setting up mechanisms preventing the Murdochs from exercising editorial control. Fox and others now have three weeks to respond before the CMA issues its final say on the matter, due by May 1.

Fox said it would “continue to engage” with the CMA. “Today’s provisional findings move our proposed Sky transaction forward to the next phase of the regulatory review process,” the company said in a statement, adding: “We anticipate regulatory approval of the transaction by June 30, 2018.”

London-based investment analyst Liberum changed its recommendation on Sky from “buy” to “hold” after the CMA’s findings were released, citing “an increased risk that the acquisition [will] not go through.” It put the chances of the deal collapsing at 40%.

Tom Watson, the Labour Party’s spokesman on media and culture and a fierce critic of the Murdochs, welcomed the CMA’s preliminary report, calling it “the right decision.”

Advocacy group Avaaz, which opposes the Fox-Sky merger, also welcomed the competition authority’s findings.

“The authorities are right to block Rupert Murdoch’s bid to take over even more of our news, which would make a mockery of the rules designed to protect the media,” said Alex Wilks, campaign director for the organization. “Now they need to expose the full extent of harassment, hacking, and pro-Trump bias at the Murdoch media empire.”

But the CMA’s provisional findings dismissed warnings from critics that Fox would fail to meet British broadcasting standards. “We did not find public interest concerns in this regard,” Lambert said.

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