Sky ordered to reduce stake in ITV to less than 7.5%

BSkyB has been ordered to reduce its 17.9% stake in ITV to less than 7.5% by the court of appeal today.

The Rupert Murdoch-owned pay TV operator lost its appeal to keep the 17.9% share, which it bought for £940 million in November 2006 to block a potential takeover of ITV by Virgin Media.

Three court of appeal judges, Lord Justice Rix, Lord Justice Lloyd and Mr Justice McKay, said: “Sky’s appeal on competition issues is dismissed, so the direction that it must reduce its shareholding to less than 7.5% will stand.”

Today’s decision supports the Competition Commission’s original ruling that Sky’s stake in ITV gave it too much influence in the UK media market, which was not in the public interest.

At the time, ITV said that it warmly welcomed the decision and found that it was in the best interests of the majority of its shareholders.

However, BSkyB has consistently opposed the ruling, arguing that it is not breaking UK media ownership laws because its stake in ITV is less than 20%.

Since the Competition Commission’s original ruling in 2007, Sky’s appeal has also been turned down by the business secretary John Denham and the Competition Appeal Tribunal (CAT).

However, the satellite broadcaster could still challenge the decision in the Supreme Court.  Lord Justice Lloyd has refused permission to take the case to the Supreme Court but Sky can apply directly to the court for a hearing if it wants to contest the decision once again.

It is thought that Sky could face potential losses of £500 million because of the ruling.