British Sky Broadcasting might have to sell more of its stake in ITV
01 Oct 2008
British Sky Broadcasting (BSkyB) could be required to offload more of its stake in ITV than it anticipated with the Competition Appeal tribunal having caught lawyers by surprise by saying that an original antitrust ruling may not have been tough enough.
Industry observers say that the upcoming prospect of more BSkyB's 17.9-per cent stake being forced onto the market, and with not that many buyers around for this kind of stake, a long-drawn-out drop in ITV's share price could eventually trigger a bid for the company. However, they anticipate that this scenario would not come about for at least the next few months.
Last December, the Competition Commission told BSkyB to offload its ownership in ITV to below the 7.5 per cent threshold. At a last hearing in end-September 2008, the tribunal dismissed BSkyB's appeal in support of rival Virgin Media's argument that the commission had been too lenient.
In a statement, BSkyB said it noted the decision, though there were no indications whether it would appeal. ITV shares plummeted almost 7 per cent before the ruling, which was handed down after the markets closed, ending at 41p.
In November 2006, BSkyB had bought 696 million shares at 135p each, totalling of £940 million. At the time, BSkyB's chief executive James Murdoch sought to block the proposed takeover of ITV by Sir Richard Branson and NTL, which now trades as Virgin Media.
Further legal hearings are due to take place in a month, which will decide whether BSkyB would have to make further divestments.
