UK Government called on to refer Murdoch bid for Sky to industry regulator Ofcom

The deal, recommended by the Sky board but which shareholders still have to vote on, comes five years after the media tycoon's last tilt at taking full control of the business through News Corporation.

That bid was derailed after the company - which owns The Sun and The Times - was forced to abandon the bid when it became embroiled in the phone-hacking scandal involving News International.

At Westminster, Tom Watson, Labour’s deputy leader and Shadow Secretary of State for Culture, said: "This bid was abandoned in the wake of the phone-hacking scandal and now it's back. The Secretary of State must refer the bid to Ofcom to assess whether it would result in too much media power being concentrated in too few hands and whether Rupert and James Murdoch are 'fit and proper persons' to run a broadcaster.”

The Midlands MP claimed Fox was trying to finalise the deal as the Christmas break approached but, he insisted, there was still time for the Government to intervene.

“They must express their view to Parliament before Christmas,” he declared, adding: “When she stood on the steps of Downing Street this summer, the Prime Minister said to the people of this country that 'when we take the big calls, we'll think not of the powerful but you'. This is a big call. The Government needs to decide whose side it's on."

Sir Vince Cable, the former Business Secretary, also called for independent scrutiny of Fox’s bid.

"This deal may be acceptable to a majority of shareholders but that doesn't mean it is in the public interest.

"The minister should now call in the takeover and start the process of independent investigation into the impact on plurality and competition. The takeover would strengthen even further the grip of a major media owner on UK media."

The National Union of Journalists expressed “grave concern” about the proposal, saying that Mr Murdoch was “not a fit and proper owner and the deal threatens media diversity and plurality in the UK”.

Michelle Stanistreet, the NUJ General Secretary, said: “It is vital that this deal is halted until part two of the Leveson Inquiry has taken place.

“Most of the British public do not believe that Rupert Murdoch is a fit and proper person to run BskyB and whilst there are clear reasons of corporate opportunism that drive his desire to finally clinch this deal, there’s no benefit for the public in this takeover being given the green light. We need greater plurality in our media, not an ever-further toxic consolidation of power and control.”

The second part of the inquiry is meant to be looking at specific claims about phone-hacking at the News of the World and what went wrong with the original police investigation. It had been delayed because of outstanding court cases but these have now finished. It has been reported that the UK Government has quietly shelved the second part of the inquiry.

21st Century Fox explained that its strategic rationale for the proposal was to create a “global leader” in content creation and distribution, enhance its sports and entertainment coverage and give it “unique and leading direct-to-consumer capabilities and technologies”.

Attention will now turn to Culture Secretary Karen Bradley, who has until Christmas to decide whether or not to refer the deal to Ofcom.

Earlier this week, the UK Government pledged to be "scrupulously fair and impartial" in its handling of Mr Murdoch's attempt to gain full control of Sky.

In a Commons statement Matt Hancock, the Culture minister, told MPs that robust procedures were being put in place to ensure Ms Bradley, who could intervene in the deal on public interest grounds, was impartial.

A number of Sky shareholders, including Standard Life Investments and Jupiter Asset Management, have also questioned the offer price since news of the bid broke last week.

But Martin Gilbert, deputy chairman of Sky, has moved to assuage their concerns.

"We, supported by our advisers, believe 21st Century Fox's offer...will accelerate and de-risk the delivery of future value for all Sky shareholders. As a result, the Independent Committee unanimously agreed that we have a proposal that we can put to Sky shareholders and recommend."

Asked about the proposed takeover and calls for a referral to Ofcom, a No 10 spokesman said: “At the moment, this is merely the Sky board recommending that shareholders accept the offer. Obviously, I would not have a comment on that; it is a quasi-judicial process.”