Britain's competition regulator has provisionally found 21st Century Fox's planned takeover of Sky is not in the public interest due to media plurality concerns.
After months of review, the Competition and Markets Authority warned that letting Fox buy up the 61 per cent of Sky it doesn't already own would concentrate too much of Britain's media in the hands of Rupert Murdoch and his family.
The CMA explained while its provisional findings were on the grounds of media plurality, its decision was not due to "a lack of genuine commitment to meeting broadcasting standards in the UK".
Anne Lambert, chairwoman of the CMA's independent investigation group, said: "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.
"We have provisionally found that if the Fox/Sky merger went ahead as proposed, it would be against the public interest. It would result in the Murdoch family having too much control over news providers in the UK, and too much influence over public opinion and the political agenda."
The CMA extended the deadline for its final report to May 1, 2018 in part due to the "exceptional volume" of submissions over the deal.
Gaining full ownership of Sky would mean that Sky News, the Times of London newspaper, and the Sun tabloid would all fall under the Murdochs' control.
In response to Tuesday's decision, Sky said it "notes the provisional view of the CMA", as well as the extended timetable for the final report.
"Regarding plurality, we are disappointed by the CMA's provisional findings. We will continue to engage with the CMA ahead of the publication of the final report in May."
The broadcaster said it still expects to be given the green light by regulators.
"We anticipate regulatory approval of the transaction by June 30, 2018," it said.
Tuesday's findings come as Sky is set for a new owner, after Disney agreed a STG39 billion ($A76 billion) deal to buy Fox's entertainment assets.
