Shareholding must fall below 7.5%
LONDON — BSkyB, Europe’s biggest paybox, is facing a potential loss of $500 million after the U.K. government ruled it must reduce its stake in ITV from 17.9% to below 7.5%.
The decision by business secretary John Hutton was widely expected. U.K. regulator the Competition Commission ruled in December that BSkyB’s holding was bad for competition and against the public interest.
The satcaster splashed out $1.88 billion on the ITV stock in November 2006 in order to block a takeover bid for ITV by arch rival, cable operator NTL, subsequently rebranded as Virgin Media.
BSkyB paid 135 pence ($2.68) a share. Today the stock is worth around 73 pence ($1.45) — hence the hit of $500 million.
The paybox, which until recently was run by James Murdoch who masterminded the “dawn raid” on ITV, has until Feb. 25 to appeal.
Given that under the terms of the U.K. 2003 Communications Act BSkyB is allowed to own up to 20% of ITV, Blighty’s biggest private terrestrial web, an appeal may well be on the cards.
It is even possible that due to the huge scale of the potential loss BSkyB may be able to make a claim for damages.
In a statement BSkyB said: “The company will give careful consideration to the announcement and confirm any further steps in due course.”
ITV welcomed the decision to force BSkyB to drastically scale back the holding saying it believed it was “in the best interests of the overwhelming majority of our shareholders.”
Virgin Media, which has lobbied hard against BSkyB, was also delighted by the news.
It said: “The secretary of state’s decision endorses the finding of both the OFT and the Competition Commission that Sky’s acquisition of a 17.9% stake in ITV was anti-competitive and contrary to the public interest. We now hope that this matter can be brought quickly to a close.”