REGULATOR Ofcom is facing a legal challenge over its ruling that Sky would remain “fit and proper” to hold a UK broadcasting licence if it was acquired by Rupert Murdoch’s 21st Century Fox.

Campaign group Avaaz said yesterday it is filing papers in court seeking a judicial review of the ruling, adding that it aims “to have Ofcom’s decision quashed and a new investigation opened”.

Alex Wilks, Avaaz campaign director, said: “Repeated, large-scale scandals in the Murdoch empire indicate that something is very rotten at the core of their businesses.

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“Ofcom didn’t dig deep enough before declaring the Murdochs fit to own even more of our media.”

Ofcom told Culture Secretary Karen Bradley in June that the takeover attempt raised “public interest concerns” and she could refer the deal to the Competition and Markets Authority (CMA) for a fuller investigation on the grounds of media plurality.

But the watchdog said the £11.7 billion merger would not stop Sky from holding a broadcasting licence.

Avaaz claims the watchdog’s decision not to rule against the deal was based on “exaggerated fears of the consequences of doing so”.

The activist group alleged Ofcom had set too high a bar for finding 21st Century Fox “unfit and improper” to hold a licence.

An Ofcom spokesperson said: “We will defend our ‘fit and proper’ assessment, which was independent, expert and based on the evidence.”