Branson to fight BSkyB's purchase of ITV stake

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LONDON -- Richard Branson on Wednesday reiterated his opposition to BSkyB's surprise purchase of a 17.9% stake in ITV earlier this month, saying that cable company NTL will aggressively argue the case before U.K. competition regulators.

Submissions to the Office of Fair Trading and media regulator Ofcom are expected to be made as early as next week.

Branson, who, as NTL's biggest shareholder, had been leading tentative merger talks with ITV before Sky's share swoop, branded the Murdoch-controlled satcaster "terrified" of competition from a combined NTL/ITV.

"The Murdoch empire was, I think, absolutely terrified at the idea of Virgin taking over, because we would have given Sky some real competition," he said, speaking via video link at a conference in London, Reuters reported.

"They responded by buying 20% (of ITV) to thwart our takeover. We have gone to the competition authorities and said that a company that already controls most of Britain's newspaper media plus has most of the sporting and film rights in the U.K. shouldn't also be allowed to have such an undue influence over ITV," Branson said, according to the wire service.

Branson had been leading talks with ITV chairman Peter Burt about a potential merger between ITV and NTL's content division Flextech. But the talks were scuppered when BSkyB bought out a number of ITV institutional shareholders to become the commercial network's biggest shareholder with a 17.9% stake.

ITV subsequently rejected the NTL bid, which it said "materially undervalued" thhe commercial broadcaster.

Under media ownership rules, Sky is allowed to own up to 20% of ITV, but Branson is challenging the stake under a separate piece of competition law -- the "general merger provision" of the U.K. enterprise act. The clause is designed to stop any shareholder with more than 15% of a company exerting "material influence" over its decisions.

Branson is not the only voice calling for an investigation into the Sky deal. Channel 4 chief executive Andy Duncan also has called for the acquisition to be examined by competition authorities, citing sport and film rights as areas of specific concern. Additionally, the all-party media select committee is questioning the deal on grounds of public interest.
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