The announcement came from Culture Secretary Jeremy Hunt after News Corp. said it would no longer spin off Sky News, a condition that the government imposed for the company to purchase the remaining 61 percent of BSkyB that it does not own.
The British Competition Commission must now investigate whether the purchase would violate the country's anti-monopoly laws. The review could take up to six months.
If the deal goes through, it would give Murdoch 100 percent control of BSkyB and 40 percent ownership of all of British commercial TV. He already owns 37 percent of newspapers in Great Britain.
With public opinion so against him, Murdoch agreed to at least delay that purchase. But the feeling among many now is that the deal is dead -- though that does not necessarily spell demise for Murdoch's resilient company.
"This is not the end of News Corp. It is simply the end of News Corp. as a constant picture over the next decade of growth and of influence," Claire Enders, a media analyst, told ABC News.