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Mr. Moore added that the company would be more comfortable arguing its case to British regulators over questions of its control over parts of the media industry than on whether it should pass the fit and proper test.

In a statement, 21st Century Fox welcomed the fit and proper decision, but said it was disappointed the British government still had reservations about its potential influence over the local media industry. It said that its takeover of Sky may now happen by June 2018.

The company has until July 14 to respond before the government formally refers the deal to Britains competition authority.

Almost immediately after it was announced in December, the proposed deal prompted concerns. Mr. Murdoch has long coveted total ownership of Sky, a satellite broadcaster he founded in the early 1990s. But the media mogul is a divisive figure in Britain, and a previous bid for Sky was withdrawn amid the hacking scandal that engulfed his British newspaper division.

Two politically independent regulators in Britain the Office of Communications, or Ofcom; and the Competition and Markets Authority began reviewing the proposed takeover, and attention quickly focused on whether the deal would limit consumer choice and whether 21st Century Fox executives met British broadcasting standards.

The Competition and Markets Authority said in its report that a merged company would control a significant part of Britains media landscape, including television, newspaper and online outlets. In response, Fox had made concessions to counter those concerns, though the British government in its separate decision said the remedies did not go far enough.

Karen Bradley, the culture minister, said Thursday that the investigation into the proposed deal had raised questions about whether the takeover would give members of the Murdoch family too much influence.

From a report issued by the Office of Communications in Britain.

The transaction may increase members of the Murdoch Family Trusts ability to influence the overall news agenda and their ability to influence the political process, Ms. Bradley said in a statement.

British officials did not hold back in their criticism of the sexual harassment scandal at Fox News, which led to the ouster of Roger Ailes, the former chairman of the network; Bill OReilly, the former Fox News anchor; and several other employees. In its ruling, Ofcom found that the scandal at Fox News had been extremely serious and disturbing, according to its report published on Thursday.

It seems clear that there were significant failings of the corporate culture at Fox News, Ofcom said in the report. Foxs response to the claims has been mixed. Some allegations were handled swiftly. But Fox was slower to deal with Bill OReilly, its star anchor.

The regulator zeroed in on the case of Mr. OReilly, noting that 21st Century Fox was aware of multiple cases that had led to settlements when it renewed its contract with him in February.

It pointed to a statement made by Fox on April 18 the day before Mr. OReilly was fired and a clarifying comment this month, saying it remained concerned that board members regarded Mr. OReillys settling cases personally as somehow a point in his favor.

Ofcom also chastised the company for the language it used to describe employee misconduct, saying that it tended to downplay the harm caused and was unnecessarily pejorative. In one example, Ofcom pointed to a May meeting with Fox, in which it described the continuum as going from appalling sexual harassment to regular dirty old man talk. (Fox later told Ofcom that the phrase was not intended to diminish the allegations.)

Mr. Ailes, who died last month, and Mr. OReilly repeatedly denied the allegations against them.

But despite scolding 21st Century Fox, Ofcom determined that the company was a fit and proper holder of British broadcasting rights. The regulator said it had found no evidence that the issues at Fox News had extended through 21st Century Fox, nor that any of the companys executives were aware of the misconduct before they were informed of it in July 2016, when Mr. Ailes was ousted.

Ofcom said it would review its position if new information became available.

One lawyer for some of the employees making sexual and racial harassment allegations rejected Ofcoms findings, saying that 21st Century Fox executives had known about the harassment before that date.

Fox has represented to Ofcom that no executive director was aware of any allegations of sexual and racial harassment at Fox News prior to July 2016, Douglas Wigdor, a lawyer representing several current and former Fox News employees who made sexual and racial harassment complaints against the network, said in an email. I can assure you that the veracity of that statement will be probed in our current litigations.

The extended review into 21st Century Foxs offer comes at a difficult time for the British government, which must eventually decide whether to approve or reject the takeover.

Prime Minister Theresa May was unable to win a majority in parliamentary elections this month, and politicians in Britain are focused on the beginning of negotiations to leave the European Union, leaving little time to consider the proposed takeover. Opposition lawmakers, and some inside Mrs. Mays Conservative Party, have balked at the deal.

21st Century Foxs attempt to buy Sky is part of the companys efforts to keep pace with digital rivals like Netflix and Amazon, which have used their streaming services to win over consumers increasingly accustomed to watching movies and television shows on mobile devices.

The acquisition of Sky, experts say, would give 21st Century Fox not only a pan-European satellite network and rights to content including English Premier League broadcasts, but also control of Now TV, Skys online streaming service.

Follow Mark Scott on Twitter @markscott82.

A version of this article appears in print on June 30, 2017, on Page B1 of the New York edition with the headline: Murdochs Big Prize Slips Away Again.

Excerpt from:
Setback for Murdoch in $15 Billion Sky Takeover - New York Times