The U.K. government intervened in 21st Century Fox Inc.’s 11.7 billion-pound (USD 14.4 billion) bid to take over Sky Plc, asking regulators to report back by May 16 on how the deal would affect British media.

“Today, I have issued a European Intervention Notice on the grounds of media plurality and commitment to broadcasting standards,” U.K. Culture Minister Karen Bradley said in the House of Commons in London on Thursday.

The regulatory process is the most important hurdle for Rupert Murdoch’s entertainment company to clear as it seeks to build a trans-Atlantic media and entertainment giant. Investors had been expecting the referral as Bradley had already hinted at intervening, and a past attempt by Murdoch to acquire Sky was sent to watchdogs in 2010.

Telecommunications regulator Ofcom will consider the plurality and broadcast-standards issues raised by Bradley. The referral also includes a procedural review by the Competition & Markets Authority. The final decision lies with Bradley, who will look at the regulators’ findings and decide whether to approve the deal, consider undertakings from Fox to address any concerns raised or send it back to the CMA for further investigation.

“We think the deal is likely to proceed,” said Roddy Davidson, an analyst at Shore Capital in London. “We do not believe that it is significantly contentious on concentration of ownership grounds to block and that there is now sufficient separation of Murdoch’s media assets.”

Ofcom has said that it will concurrently conduct a so-called fit-and-proper assessment of Sky as a broadcast license holder in light of the pending change of control.

The process is not new to billionaire Murdoch, whose previous attempt to acquire Sky was on the brink of approval before a phone-hacking scandal erupted at his newspapers. Allegations that Murdoch’s News of the World, the U.K.’s biggest newspaper, routinely listened to private voicemail messages to get stories triggered widespread outrage and led to the shuttering of the tabloid in 2011.

“21st Century Fox looks forward to working with U.K. authorities,” the New York-based company said in a statement. “We are confident that a thorough review of our track record over 30 years will underscore our commitment to upholding high broadcast standards, and will demonstrate that the transaction will not result in there being insufficient plurality in the U.K.”

Fit and Proper

In the wake of the hacking scandal at News International, Ofcom in 2012 conducted a so-called fit-and-proper assessment of Sky, given News Corp.’s 40 percent stake in the broadcaster, the roles of Rupert and his son James Murdoch at both companies, and the Murdoch family’s voting influence at News Corp.

Ofcom cleared Sky then, but criticized James Murdoch for corporate governance failings. He is now Sky’s chairman and the chief executive officer of 21st Century Fox.

Murdoch’s News Corp. has since been split, with Fox owning the film-and-television business, but opponents of the current proposal have continuing concerns about Murdoch having too much control over U.K. media. The Murdoch family has about a 40 percent voting interest in Fox and in News Corp.

“The record of criminality at Murdoch newspapers and the untramelled power they already have makes it clearly against the public interest for them to take full control of Sky,” said Ed Miliband, the former U.K. Labour party leader who led opposition to the Murdochs’ first attempt to buy the broadcaster.

“We know from decades of experience and the revelations at the Leveson inquiry that the Murdochs already have excessive influence,” Miliband said, referring to the public inquiry into the culture and ethics of the British press that followed the phone-hacking scandal.

Brexit Priorities

This time, the U.K. is also in the process of leaving the European Union and the government is under pressure to encourage investment as it breaks from the trading bloc. In the Commons on Thursday, former culture secretary and Conservative lawmaker John Whittingdale pointed out the value of Fox’s investment as a vote of confidence in the U.K. broadcasting industry.

“The U.K. will remain open for business to the whole world after we leave the EU,” Bradley said in response. “I look forward to making a fair and transparent decision.”

On plurality, Ofcom will assess how the deal affects the diversity of viewpoints in the media and the degree of influence any one owner would have over public opinion and the political agenda. News UK, a division of News Corp., owns the Times, the Sunday Times and the Sun, while Sky operates Sky News, the fifth most used news source across all platforms in the U.K., according to a 2015 Ofcom report.

Fox argues that plurality has increased in recent years, boosted by increasing consumption of news online and through social media. Fox also argues that the splitting of News Corp. and a board consisting mostly of independent directors reduces any influence the Murdochs would have over Sky.

Governance Failings

On broadcasting standards, the U.K. government has raised concerns about past corporate governance failings by James Murdoch and the history of illegal activities at the News of the World.

“The main issue will be the fit-and-proper test,” said Sarah Simon, an analyst at Berenberg. “If the press is sitting on any explosive information, we’d expect to see that leaked out over the next few weeks.”

Fox argues that it has learned from the phone-hacking scandal and takes corporate governance matters very seriously, and says it has revamped its compliance and ethics programs since the revelations broke.

Uncertainty over whether Fox will succeed in buying the rest of Sky has led traders to discount the U.K. satellite broadcaster’s stock. Sky’s shares were trading at 9.88 pounds at 12:35 p.m. in London, leaving the stock 8.1 percent below Fox’s offer of 10.75 pounds per share. - Bloomberg