Sky Could Be Forced To Sell Stake In ITV At A ‘Substantial Loss’

Sky’s acquisition of an almost 18% share in ITV is against the public interest and restricts competition, according to the Competition Commission.

Murdoch’s company could be forced to sell its stake in the commeical broadcaster at a substantial loss, which must have come as welcome news to Sir Richard Branson’s Virgin, which has been involved in a battle with Sky since the purchase (see Virgin Media And Sky: The Story So Far).

In a provisional ruling, the commission said that the shareholding would allow the satellite broadcaster to weaken ITV or prevent it competing fully with BSkyB.

Sky bought the stake for £940 millionn November 2006. Based on ITV’s current share price, the holding is worth £717 million.

“The acquisition has made BSkyB ITV’s largest shareholder by some margin and while our provisional view is that this would not necessarily affect day to day operations, BSkyB would be able to influence ITV’s key strategic decisions, particularly relating to investment, whether in content, capacity or new technology,” said Peter Freeman, chairman of the commission.

Ofcom and the Office of Fair Trading both launched investigations into the acquisition last year. On their recommendation, the Department of Trade and Industry referred the issue to the Competition Commission in May (see Sky’s Stake In ITV Referred To Competition Commission).

The commission is aiming to send its final report to John Hutton, secretary of state for Business, Enterprise and Regulatory Reform, in December. He will then decide what action to take.

ITV said: “We will be reviewing the commission’s notice of possible remedies in detail and look forward to working with the commission so that the issues arising from BSkyB’s stake can be addressed.”

BSkyB: 020 7705 3000 www.sky.com ITV: 020 7843 8000 www.itv.com