It's proposing that Sky News could be either spun off or divested from Sky itself - shareholders in the broadcaster had previously indicated they would close the loss making news channel if they did not approve the £11.7 billion purchase.
"The Disney/Fox transaction, if completed, would significantly weaken the link between the MFT and Sky which is at the root of our provisional concerns about media plurality", it added.
What are Murdoch's options now?
Last month Fox announced the sale of most of its entertainment assets - including its 39 per cent stake in Sky - to Disney.
However, the Disney deal will undergo investigations of its own, which are also likely to drag on, and the Sky/Fox issue has to be settled first. However, that would leave Fox with a £200m bill for backing out, and there is no guarantee the Disney deal will get regulatory clearance to take over Fox. On the former, it said the Murdoch family's cross-shareholdings in Fox and News Corp, owner of the Times and Sun newspapers, would give it excessive influence over public opinion. "The cross platform reach for Sky News is 21 percent and NewsCorp is 14%, and 31 percent on a combined basis, meaning that almost one in three members of the public uses one of their platforms to access news".
However, that deal is unlikely to be completed before Britain's review of the Sky deal is wrapped up.
Its decision to provisionally block the takeover to defend media plurality was still applauded on social media.
Such a move would be political dynamite - critics have already accused Murdoch of using Sky News and its staff as "pawns" to coerce regulators and the government.
Disney has yet to state its intentions over Sky News' future.
The CMA said the transaction may be against the public interest, taking into account the need "for there to be a sufficient plurality of persons with control of the media enterprises".
Fox said it was "disappointed" at the provisional ruling.
It would be ironic if an attempt to preserve media plurality resulted in the ultimate closure of Sky News, which has provided strong competition to bigger players over for almost 30 years.
But, it said News Corp had put "processes and procedures" in place to address these and that since then, the group's record of compliance with press standards "does not raise concerns".
Who makes the final decision?
The watchdog has extended the deadline for its final report to May 1 2018, in part due to the "exceptional volume" of submissions over the deal.
If the deal completes the Murdoch concerns largely go away but United Kingdom authorities would need to be convinced that the Disney/Fox deal has a decent chance of being completed as expected. That has complicated the CMA's decision.
Rupert Murdoch on September 10, 2017.
Not quite. The deal with Disney will see the Murdoch family trust hold a stake of just under 5% in the enlarged company.
They also said they would make a further announcement "as and when appropriate".
What do the Murdochs own?