Sky’s ITV Stake Raises Significant Competition Concerns
The Office of Fair Trading has told the government that BSkyB’s acquisition of an almost 18% stake in ITV means Britain’s biggest commercial broadcaster is no longer fully independent, and the deal raises significant competition concerns.
The OFT has said that the case needs to be referred to the Competition Commission, after reporting to the Department of Trade and Industry after looking into Sky’s £1 billion swoop on ITV’s shares late last year.
OFT chief executive John Fingleton said: “We have concluded that this partial ownership link between two key players raises significant competition concerns.
“Sky’s shareholding means that ITV is no longer fully independent, and this may alter the future competitive landscape, especially as we approach digital switchover.
“Given the high stakes for tens of millions of UK consumers, we believe these risks to competition merit further examination.”
In a statement the OFT said it believed that the test for a merger reference to the Competition Commission was met on competition grounds.
It added that following full first-phase review, the OFT’s three key findings were that a relevant merger situation has been created and that “this situation has resulted, or may be expected to result, in a substantial lessening of competition within a market or markets in the UK, and clear cut remedies sufficient to resolve the OFT’s competition concerns were not offered.”
Ofcom has also said that there are public interest issues, in relation to sufficient plurality of news provision for both cross media and television news in the UK.
Secretary of state Alastair Darling will now consider Ofcom’s advice, which will inform his decision on making a reference to the Competition Commission. The Secretary of State will announce his decision by 26 May 2007. Ofcom’s report will be published no later than this date.
Darling asked Ofcom to review the Sky purchase in February to ascertain whether it raised “public interest concerns about the number of different owners of media enterprises” (see Darling Demands Ofcom Investigate Sky’s Stake In ITV).
In response to the the OFT and Ofcom reports, a Sky spokesman said: “Today’s statements reflect the continuation of an existing regulatory process with which we will continue to engage fully.
“More than any other company, Sky has led the unprecedented expansion in choice and diversity of views available to British families. The number of channels has grown from four when Sky was founded in 1989 to over 400 today, spanning entertainment, arts, children’s, news, sports and documentary genres.
“Sky believes in choice and competition and supports an environment that fosters investment and dynamism in today’s fast-changing media landscape.”
BSkyB: 0207 705 3000 www.sky.com