Ofcom, the media regulator, is to consider whether News Corporation would make a “fit and proper” owner of satellite broadcaster BSkyB.
In a statement, Ofcom’s chief executive Ed Richards, emphasised that he would not act while the police and courts carried out their work, but he has written to the authorities asking to be “kept abreast” of information that would help Ofcom.
It follows allegations of illegal activities at the News of World and on Friday, former NoW editor Andy Coulson was arrested by police investigating hacking allegations.
News Corp, owner of the NoW, wants to buy the 60.1% of BSkyB that it does not already own.
Ofcom is required to ensure that any company – and its directors – holding a broadcast licence are “fit and proper” to do so.
Mr Richards added that Ofcom is “very conscious of the level of concern about these matters in Parliament and in the country more widely”.
The regulator’s move could further delay News Corp’s £10bn-plus bid for BSkyB, as the police investigation could take many months.
News Corp has said it will spin off the loss making Sky News into a separate company in order to get clearance for a BSkyB takeover. The undertaking is intended to secure Sky News’ editorial independence.
After Ofcom’s statement BSkyB shares extended their falls, and closed down 7.64% amid worries that News Corp’s bid could be blocked. On Wall Street, New Corp shares fell more than 3%.
On Friday, Mr Coulson, David Cameron’s former communications director, was arrested on allegations of phone hacking and payments to police. He has always denied wrong-doing.
And the NoW’s former royal editor, Clive Goodman, is being questioned on suspicion of corruption. He has already served a prison sentence over the phone hacking affair.
Earlier today, Culture Secretary Jeremy Hunt indicated that a final decision on the proposed takeover was still some way off.
This followed his department receiving over 155,000 submissions by the public on the bid.
It will “take some time” to assess the “volume of responses”, the department said in a statement.
Mr Hunt, who has previously said he is minded to approve the takeover, will also consider how the closure of the News of the World will affect the deal and UK media plurality.