Murdoch’s BSkyB to appeal ruling forcing it to reduce stake in ITV

BSkyB said yesterday it has applied to the Competition Appeal Tribunal for permission to appeal an earlier ruling by the UK court on the firm's 17.9-per cent stake in ITV PLC.

In late September, the tribunal ruled that BSkyB had to reduce its stake in ITV to less than 7.5 per cent, upholding a 2006 judgment by the Competition Commission, which found that BSkyB's stake in ITV was uncompetitive. The timeframe for the stake divestment wasn't revealed at the time, but is widely expected to be a period of about six months.

BSkyB bought the ITV stake in November 2006, in a move interpreted to be an attempt to block preliminary merger talks then taking place between ITV and Virgin Media Inc, a move disaproved by the UK's competition (See: UK Competition Commissioner wants BSkyB to divest ITV stake) . Virgin Media was then trading as NTL Inc. BSkyB spent over 135 pence a share or $1.45 billion in a deal which effectively blocked NTL's proposed acquisition f ITV.  (Also see: NTL drops ITV bid, takes BSkyB to regulators)

Analysts had predicted that BSkyB would try to draw out the appeals process for as long as possible in the hope that ITV's share price would recover some of the falls it has seen since BSkyB bought the stake in 2006. If the case is allowed, it could take up to a year to be settled by the Court of Appeal lawyers believe, although they say it is hard to predict.

A Virgin Media spokesman said, ''We urge the Competition Appeal Tribunal and the Court of Appeal to recognise Sky's application for what it is: a blatant attempt to delay an already drawn-out process still further.''

The announcement is the latest twist in the controversial purchase which pitted the Murdoch family against Britain's most famous entrepreneur, Richard Branson.

The move, spearheaded by then BSkyB chief executive James Murdoch, son of media tycoon Rupert murdoch, prompted a slanging match between the two sides, with Virgin Media's largest shareholder Sir Richard Branson labelling the Murdoch media empire a 'threat to democracy' after BSkyB bought its ITV stake.

BSkyB has always maintained that it acted within the rules and has described itself as a long-term shareholder that believes in the value of ITV.

British Sky Broadcasting (BSkyB - Sky Television and BSB) is a company that operates Sky Digital, a subscription television service in the UK and Ireland. It produces TV content, and owns several TV channels.

It is the UK's largest pay TV provider. More than a third of the equity is owned by News Corporation, an Australian-American company chaired by media mogul Rupert Murdoch. It had £724 million of income on £4.551 billion revenues last year and has a global workforce exceeding 13,000.