BSkyB Share Price Plummets
BSkyB’s share price dropped dramatically this morning on rumours that the ITC is considering telling the satellite broadcaster that it must withdraw its stake in British Digital Broadcasting if the consortium wants to stay in the race for control of the three digital multiplex licences which are up for grabs. BSkyB’s price has fallen 43.5p to 523p already today.
According to the Financial Times the ITC has decided that if BSkyB remains in British Digital Broadcasting, the consortium, which is also made up of Carlton Communications and Granada Group, would have too much power in the broadcasting industry.
This report could not have come at a worse time for BSkyB, whose shares were already weakening after yesterday’s news that Sam Chisholm, its chief executive, would be standing down at the end of the year (see BSkyB Chief Executive To Quit). BSkyB has so far cleverly manoeuvred itself into a position whereby it has interests in both digital terrestrial TV and digital satellite TV and it would be a huge blow for the company’s future plans, which place so much importance on digital, if it was not allowed to participate in BDB.
As the chart below shows, BSkyB has had a mixed run of fortune over the past twelve months. In October the broadcaster enjoyed a surge in its stock price, mainly due to news that Rupert Murdoch had won a court case in Australia to launch a Super League rugby competition and speculation that BSkyB would win an equity stake in the Flextech/BBC partnership. It then dropped when it emerged that Murdoch had been involved in a huge cash raising exercise which effectively meant he was ‘mortgaging’ his BSkyB shares. BSkyB suffered a further blow at the end of October when Oftel said it would be investigating the broadcaster’s promotional offer with BT whereby members of BT’s Friends and Family scheme were offered savings on Sky subscriptions. It was the announcement of BSkyB’s involvement with BDB at the start of the year which then helped its shares to rally, though since then its price has been far from stable.
The ITC this morning told Newsline that the any reports about the digital terrestrial bidders are “pure speculation” and it had made no decision as to who would win the licence. BDB’s rival bidder for the three digital licences is Digital Television Network, a company which brings together NTL and United News & Media.
BDB declined to comment on the FT article.