Regulator rules against broadcaster

BSkyB, Europe’s biggest paybox, could be forced to give up its stake in free-to-air U.K. broadcaster ITV, following a provisional ruling by the Competition Commission.

BSkyB stunned the British TV industry when it forked out more than $1.8 billion for a 17.9% stake in ITV in November.

But the commission said Tuesday that the holding restricts competition and “operates against the public interest.”

The commission added: “The acquisition has made BSkyB (into) ITV’s largest shareholder by some margin. As a pay TV operator, BSkyB faces competition from the free-to-air offer, of which ITV is an important part. BSkyB would therefore have both the ability and incentive to take advantage of opportunities to weaken ITV or prevent it from taking actions that would threaten BSkyB’s interests.”

The ruling is a potential blow to BSkyB, whose CEO, James Murdoch, bought the stake to derail an attempt by cable operator NTL, subsequently rebranded Virgin Media, to buy ITV.

BSkyB said the company would “continue to engage with the commission during the remainder of the process.”

In a statement Virgin Media said: “Strong remedies are required to finally resolve the matter. Sky should not be permitted to remain in a position where there is any question whatsoever about its ability to influence ITV.”

If BSkyB is forced to offload the stock, it stands to lose around $440 million at ITV’s current stock price.

Murdoch has always insisted the stake is legal because cross-media ownership rules allow BSkyB to own up to 20% of a rival broadcaster.

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