The UK's competition watchdog looks poised to launch an in-depth investigation into Rupert Murdoch's £11.7bn swoop for Sky after British culture secretary Karen Bradley said she was "minded" to refer the bid for further scrutiny.
Speaking in the Commons, Ms Bradley said an Ofcom report found that the attempt by Murdoch's 21st Century Fox to acquire the 61% of Sky it does not already own risks handing the tycoon's family "increased influence" over the UK's news agenda and the political process.
Ofcom told the Secretary of State that the takeover attempt raised "public interest concerns" and she could refer the deal to the UK's Competition and Markets Authority (CMA) for a fuller investigation on the grounds of media plurality.
Ms Bradley told MPs: "Ofcom's report states that the proposed transaction would give the Murdoch Family Trust material influence over news providers with a significant presence across all key platforms.
"This potentially raises public interest concerns because, in Ofcom's view, 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 and it may also result in the perception of increased influence.
"These are clear grounds whereby a referral to a phase two investigation is warranted - so that is what I am minded to do."
Ms Bradley said Sky and Fox could make representations to her before she reaches a final decision, with a deadline of July 14.
However, she was "minded not to refer" the bid to a phase two investigation in relation to a "genuine commitment to broadcasting standards".
Her comments came as Ofcom said the merger would not stop Sky from holding a broadcasting licence, despite concerns over "significant failings" in the corporate culture at Fox News.
While the broadcast regulator made clear it was not its role to investigate allegations of sexual and racial harassment at Fox News, it said the US news giant's response to the claims had been "mixed".
It also flagged that Fox News had only "recently rectified" a failure to put in place regulatory compliance procedures.
Focusing on the sexual harassment complaints, the regulator said: "Some allegations were handled swiftly. But Fox was slower to deal with Bill O'Reilly, its star anchor.
"In order to have a concern about fitness and properness we would need to see evidence of misconduct in the parent company Fox.
"However, we have no clear evidence that senior executives at Fox were aware of misconduct before it was escalated to them. And senior executives put in place new corporate governance arrangements."
Mr Murdoch's bid comes five years after his last attempt at taking the business over through News Corporation in 2011.
The tilt faced opposition from media industry rivals and politicians before it was scuppered by acute pressure on the company brought about by phone-hacking claims involving News International.
Responding to Ms Bradley, 21st Century Fox said it was "disappointed" by the announcement.
In a statement, the company said: "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'.
"Separately, 21st Century Fox is pleased that Ofcom recognises that Sky, under full 21st Century Fox ownership, would remain a fit and proper holder of broadcast licenses."
21st Century Fox will now make representations to the Secretary of State regarding the decision and Ofcom's report.
Sky said: "Sky welcomes today's announcement of Ofcom's decision that Sky would continue to be a fit and proper holder of its broadcast licences under full ownership of 21CF and will continue to operate its business as usual."