Murdoch's British network ends legal battle
BSkyB, the U.K.’s dominant paybox, has accepted defeat in its protracted battle to maintain a 17.9% stake in local terrestrial rival ITV, which airs shows such as “X Factor” and “Coronation Street.”
On Monday the paybox indicated it would offload around 10.4% of its ITV stake, following a two-year legal battle. The move will take the satcaster’s ITV stake to below the 7.5% required by U.K. regulators.
Investment bank Morgan Stanley is handling the share placement, which is likely to be completed by as early as today.
Based on ITV’s closing stock price of 51.3p, the satcaster stands to raise about £207 million ($324 million).
This means that BSkyB, ITV’s single biggest stock holder, will lose several hundred million pounds on the forced sale.
This is a loss the paybox may consider worth incurring because its initial share grab in November 2006 prevented arch-rival NTL, subsequently rebranded as Virgin Media, from buying ITV.
A Sky spokesman said: “Sky will not pursue a further appeal in relation to its investment in ITV.We have entered into undertakings with BIS (the department for Business, Information and Skills) and we can confirm that Morgan Stanley is acting as sole book runner on the placement of approximately 10.4% of ITV.”
On Jan. 21, the U.K.’s Court of Appeal ordered BSkyB to scale back its ITV holding to less than 7.5% in what was the fourth court ruling on the stock holding.
Under the then-leadership of CEO James Murdoch the paybox spent $1.4 billion buying 696 million shares at 135p in what was an audacious swoop.
At one point during BSkyB’s ownership of the stake, ITV’s stock price plunged as low as 17p.
Lately, however, the price has started to rise following radical cost cuts at the terrestrial web and an improved picture for ITV advertising revenue.
There is speculation that with almost 700 million of ITV’s 3.89 billion shares up for grabs, a potential buyer for ITV could use the BSkyB stake as a stepping stone to a full takeover.
Pan European broadcast giant RTL is regarded as a potential buyer.