Culture Secretary Lisa Nandy has said she is “minded to intervene” in the proposed £1.6bn deal for Sky to buy ITV’s media and entertainment division.

Nandy said there were reasonable grounds to believe the deal could affect free expression in the media and the variety of Britain’s news landscape.

Sky said it would “carefully consider” a letter from the culture secretary and “engage constructively” with the review into the deal.

“We remain confident that bringing Sky and ITV’s media and entertainment business together will create a stronger British media,” it said.

ITV welcomed the letter and said the deal would help it “compete with global streaming platforms, benefiting viewers, advertisers and the UK creative industries”.

The two companies announced in July that Sky had agreed to buy ITV’s broadcasting business, including its free-to-air TV channels and the ITV X streaming service.

The deal does not include ITV’s production arm, ITV Studios, which makes popular programmes such as Love Island and I’m a Celebrity… Get Me Out of Here.

It would give Sky access to millions more viewers, while bosses hope it would help both compete with streaming giants such as Netflix.

But Nandy has told Sky and ITV that she is considering issuing a public interest intervention notice (PIIN) to the competition watchdog, forcing it to investigate the tie-up.

In a letter to both companies, she said she was minded to order the investigation so the Competition and Markets Authority (CMA) could address public interest considerations including:

The letter said Nandy recognised Sky News and ITV News were two of the most prominent sources of television news in the UK, with a joint 26% share of viewers.

Consumers would still have access to other sources of news such as the BBC and Channel 4, it added.

But Nandy believes that, over time, the tie-up could undermine the range of views available to viewers, with 86% of the news market controlled by the BBC and Sky/ITV.

The North of England could be particularly hard hit as well as nations of the UK other than England and those from lower socio-economic backgrounds, the letter argued.

This is because their main source of news is broadcast news, it added.

Sky and ITV have been given until 20 October to respond to the culture secretary’s concerns.

A Sky spokesperson said: “We have already made clear commitments to protect ITV’s identity, its free-to-air services and public service broadcasting obligations, and to ensure ITV News and Sky News remain distinct editorial voices.”

An ITV spokesperson said: “We welcome the publication of the secretary of state’s ‘minded to’ issue a public interest intervention notice letter as was expected and look forward to fully co-operating in the process.

“This is another important milestone in the regulatory review process towards creating a UK player with the scale and resources to better compete with global streaming platforms, benefiting viewers, advertisers and the UK creative industries.”

Nandy’s intervention would be made under a new public interest consideration.

This would need legislation to be brought forward, given that current laws do not cover the effect of a merger on streaming or on-demand programmes.

She said: “If I decide to intervene on the basis of this new public interest consideration, I will bring forward legislation… to extend the application of the public interest consideration relating to the availability of a wide range of broadcasting to on-demand programmes.”