Hunt said that on the evidence supplied by Ofcom, which submitted its report on the takeover on December 31 last year, there are sufficient grounds to believe that the takeover "may operate against the public interest in media plurality".
However, the culture secretary feels that it is right to consider any "undertakings" from Rupert Murdoch's News Corp aimed at assuaging concerns about the takeover. It is thought that proposals mooted by News Corp include tighter editorial controls for Sky News, or an outright sale of the rolling news broadcaster.
"I still intend to refer the merger to the Competition Commission. On the evidence available, I consider that it may be the case that the merger may operate against the public interest in media plurality," said Hunt.
"Before doing so it is right that I consider any undertakings in lieu offered by any merging party which have the potential to prevent or otherwise mitigate the potential threats to media plurality identified in the Ofcom report."
He added: "If this process produces undertakings in lieu which I believe will prevent or otherwise mitigate the merger from having effects adverse to the public interest, and which I propose to accept, I will then publish the undertakings in lieu and begin a formal 15 day consultation period during which time all interested parties will be able to express their views."
Today, Ofcom published its previously confidential report on the takeover, which as expected recommended a minimum six-month probe by the Competition Commission.
Hunt declined to indicate how long his decision-making process would take beyond the 15-day consultation, but he did say that Ofcom would be asked to review the potential impact of News Corp's undertakings on media plurality. The Office of Fair Trading, using section 93 of the Enterprise Act 2002, will also play a part in deciding whether to accept the alternative proposals.
In a statement, News Corp expressed its frustration at Ofcom's report, which it believes was "deficient in a number of ways".
The company said: "News Corporation has made a submission to the Department of Culture, Media and Sport setting out a number of issues with the Ofcom report.
"However, in the interests of progressing to a transaction, News Corporation has submitted an undertaking that we believe addresses Ofcom's concerns. We will continue to engage constructively with the regulatory process."
News Corp is thought to be concerned that during a six-month investigation at the Competition Commission, Sky's share price would increase considerably. On today's developments alone, the share price increased by 6% to 755.5p each.