What's going on?

Media mogul Rupert Murdoch�s plans to obtain full control of Sky, the pay TV broadcaster, has hit a speed bump as the UK government suggested that the proposed deal would be reviewed by the competition authorities.

What does this mean?

Three months ago, 21st Century Fox, which is essentially controlled by the Murdoch family, said it had agreed to buy the 61% of Sky that it doesn�t already own. This prompted concerns about competition in Britain�s media industry, as Murdoch-controlled companies already own a number of UK media companies (like popular newspapers The Times and The Sun).


The government minister responsible for overseeing the process said on Thursday that she was �minded to� refer the deal to the Competition and Markets Authority, which assesses the impact of mergers and acquisitions on the competitive landscape of the respective industry. Fox still expects the deal to ultimately get done, but said its timing would get delayed by about six months if the deal was reviewed.

Why should I care?

For markets: Sky�s stock price rose, suggesting investors think the deal is more likely to go through.

The government could have used much more aggressive language � �minded to� is a phrase that one�s mother might use when contemplating a punishment. It�s far from a severe grounding. Given the fairly benign language, investors pushed up Sky�s stock price about 3%, closer to Fox�s agreed takeover price (although risks to the deal getting done remain).


The bigger picture: This competition stuff does, sometimes, matter.

In the US on Thursday, an acquisition in the drugstore space (sort of) fell apart. Walgreens cut in half the number of stores it would buy from competitor Rite-Aid following concerns from the regulator that a full takeover would harm competition too much (and, therefore, leave customers vulnerable to unfair price increases). So, while Fox and its investors appear sanguine for now, competition reviews certainly have the potential to mess a deal up!