Regulator Recommends BSkyB Downsize Stake In ITV

The Competition Commission has suggested that BSkyB be forced to sell its substantial 17.9% stake in ITV as it currently restricts competition in the TV market.

The regulator also recommended that the Secretary of State, John Hutton should seek undertaking from BSkyB that it would not seek representation on ITV’s board.

The Competition Commissions’s report published today by the Department for Business Enterprise and Regulatory reform found that the acquisition “may be expected to operate against the public interest.”

The report recommended that a reduction in BSkyB’s stake to below 7.5% would be adequate and was the “least intrusive” option.

“We recognise that this assessment was not solely a matter of calculation or quantitative analysis, but was in part a matter of judgement. However, we were confident that, below this level, there would be no realistic prospect that BSkyB would be able to exercise material influence in the ways that we had to be identified,” the report stated.

Mr Hutton is required to accept the Competition Commission’s findings but has discretion in making decisions on the effects on media plurality and also on any appropriate remedial measures.

The Competition Commission launched its inquiry into Sky’s shareholding in May after Ofcom and the Office of Fair Trading concluded that the stake raised “significant” competition and public interest concerns.

BSkyB maintains that it has not sought to influence ITV and that the stake in ITV was an investment.

However, Virgin Media has accused BSkyB of effectively blocking an ITV takeover and said in a statement following the report: “We’re pleased that the Competition Commission has acknowledged the serious problems raised by Sky’s stake in ITV and, in particular, its potential to distort the competition landscape.”

ITV said in a statement that it “welcomed the publication of the Competition Commission’s report today and awaits a final decision by the secretary of state in due course.”

Any “interested” part that wished to make any further representations on the report has until January 7 to file a submission.

Sky paid £940 million for the stake in November last year and may stand to lose up to £180 million in the sell off.

The move re-opens the door for Virgin Media and other potential buyers to attempt a merger with the commercial channel.


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