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BSkyB 'should sell shares in ITV' BSkyB 'should sell shares in ITV'
(40 minutes later)
BSkyB should be forced to sell some of its 17.9% stake in ITV, the Competition Commission has recommended.BSkyB should be forced to sell some of its 17.9% stake in ITV, the Competition Commission has recommended.
The regulator said that BSkyB should either sell all of its shares or cut its stake to below 7.5% and promise not to take a seat on ITV's board.The regulator said that BSkyB should either sell all of its shares or cut its stake to below 7.5% and promise not to take a seat on ITV's board.
BSkyB and ITV both said they were studying the report and awaiting a final decision from the government.BSkyB and ITV both said they were studying the report and awaiting a final decision from the government.
Business Secretary John Hutton has until 29 January to decide what action to take on the report's findings.Business Secretary John Hutton has until 29 January to decide what action to take on the report's findings.
He has to accept the commission's findings about the impact on competition, but is allowed to come up with different solutions to the problems identified.He has to accept the commission's findings about the impact on competition, but is allowed to come up with different solutions to the problems identified.
BSkyB says that it has not sought to influence ITV and when it bought that stake in November last year it did so as an investment.BSkyB says that it has not sought to influence ITV and when it bought that stake in November last year it did so as an investment.
But Virgin Media has accused BSkyB of effectively blocking an ITV takeover.But Virgin Media has accused BSkyB of effectively blocking an ITV takeover.
Investment worryInvestment worry
The commission found that BSkyB's stake would be big enough to allow it to block special resolutions and that it "would limit ITV's strategic options, for example its ability to raise funds".The commission found that BSkyB's stake would be big enough to allow it to block special resolutions and that it "would limit ITV's strategic options, for example its ability to raise funds".
Check ITV share priceCheck BSkyB share price
It also decided that there would be an effect on ITV's programming.It also decided that there would be an effect on ITV's programming.
"Given its interests as a competitor and despite its interests as a shareholder, we believed that BSkyB would have the incentive to reduce ITV's investment in content," the report said."Given its interests as a competitor and despite its interests as a shareholder, we believed that BSkyB would have the incentive to reduce ITV's investment in content," the report said.
But in terms of news coverage, the report concluded that BSkyB's stake would not allow it to exert significant influence over ITV's news output or over ITN, in which ITV holds a 40% stake.But in terms of news coverage, the report concluded that BSkyB's stake would not allow it to exert significant influence over ITV's news output or over ITN, in which ITV holds a 40% stake.
BSkyB said in a statement: "The next phase of this process lies with the Secretary of State. We will be making representations to him in due course."BSkyB said in a statement: "The next phase of this process lies with the Secretary of State. We will be making representations to him in due course."
A statement from ITV said: "ITV welcomes the publication of the Competition Commission's report today and awaits a final decision by the Secretary of State in due course."A statement from ITV said: "ITV welcomes the publication of the Competition Commission's report today and awaits a final decision by the Secretary of State in due course."
Competition rowCompetition row
On 17 November 2006, BSkyB announced that it had spent £940m buying 17.9% of ITV.On 17 November 2006, BSkyB announced that it had spent £940m buying 17.9% of ITV.
But the commission's report dismissed BSkyB's argument that it had bought the shares because they were cheap.But the commission's report dismissed BSkyB's argument that it had bought the shares because they were cheap.
"We thought it unlikely that that BSkyB would have chosen to invest in ITV purely as an investment vehicle," the commission said."We thought it unlikely that that BSkyB would have chosen to invest in ITV purely as an investment vehicle," the commission said.
It bought the shares at a price of 135 pence each. By the close of trade on Wednesday they closed at 83p, which means BSkyB will make a hefty loss if it is forced to sell.It bought the shares at a price of 135 pence each. By the close of trade on Wednesday they closed at 83p, which means BSkyB will make a hefty loss if it is forced to sell.
They were bought at a controversial time, when ITV was struggling without at chairman and NTL, which has since been rebranded as Virgin Media, was considering a takeover.They were bought at a controversial time, when ITV was struggling without at chairman and NTL, which has since been rebranded as Virgin Media, was considering a takeover.
At the time Sir Richard Branson, who was NTL's biggest shareholder, described BSkyB's share purchase as, "a blatant attempt to distort competition".At the time Sir Richard Branson, who was NTL's biggest shareholder, described BSkyB's share purchase as, "a blatant attempt to distort competition".
Four days later ITV rejected NTL's approach, saying it undervalued the company.Four days later ITV rejected NTL's approach, saying it undervalued the company.
A week after that, ITV announced that Michael Grade had left the BBC to become its new chairman.A week after that, ITV announced that Michael Grade had left the BBC to become its new chairman.