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Rupert Murdoch’s Twenty-First Century Fox, Inc.‘s (FOXA - Free Report) proposed acquisition of remaining 61% stake in Europe’s leading pay-TV broadcaster Sky plc hit a further roadblock after U.K. Culture Secretary Karen Bradley demanded detailed review from the Competition and Markets Authority (“CMA”).

Bradley had earlier demanded a review as the deal “potentially raises public interest concerns”. However, what came as a surprise is that she now also wants reviewers to examine the company’s commitment to broadcasting standards.

The U.K.’s Office of Communications commonly known as Ofcom had no problem regarding Twenty-First Century Fox’s capability to match U.K. broadcasting criteria. Earlier, Bradley also had no concerns about the company’s commitment toward broadcasting standards. As the matter is referred for further review the company expects deal to be sealed by Jun 30, 2018.

We believe this is a major setback for Twenty-First Century Fox. The deal which is valued at $15.2 billion will strengthen the company’s position in pay-TV network in Britain, Ireland, Austria, Germany and Italy. As of 2016, Sky already has 21 million pay-TV subscribers and 30,000 employees. Moreover, the deal will reinforce Sky’s position in entertainment and sport, and will also augment adjusted earnings and free cash flow.

Despite this discouraging news mot much movement was witnessed in the company’s share price. However, we noted that the stock has declined 15.1% in the past six months, wider than the industry’s decrease of 11.5%. Over the same period, other stocks from the same space which include Lions Gate Entertainment Corp. (LGF.A - Free Report) and Eros International Plc (EROS - Free Report) have gained 17.6% and 28.5%, respectively, while World Wrestling Entertainment, Inc. (WWE - Free Report) has increased 7.9%.

Twenty-First Century Fox currently carries a Zacks Rank #3 (hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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