BSkyB eyes reversal of fortune
$380 million rides on decision regarding ITV stakeU.K. satcaster British Sky Broadcasting stands to lose as much as £190 million ($380 million) if a Competition Commission recommendation that it be forced to reduce its stake in ITV stands.
Finding that the acquisition "may be expected to operate against the public interest," the commission's report — published Thursday by the Department for Business Enterprise and Regulatory reform — called for BSkyB to cut its 17.9% shareholding in the U.K.'s main terrestrial commercial broadcaster to less than 7.5% and added that it should not have representation on the ITV board.
The suggested reduction was expected following preliminary findings by the Office of Fair Trade.
"We concluded that a divestment of shares to below 7.5% would be effective in remedying the SLC (substantial lessening of competition) and the consequent adverse effects on the public interest," the report said. "We recognized that this assessment was not solely a matter of calculation or quantitative analysis, but was in part a matter of judgment. 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 identified."
BSkyB, which paid £940 million ($1.9 billion) for the stake in November, issued a brief response to the report. "We note the publication of the report and we are considering its contents carefully. The next phase of this process lies with the Secretary of State. We will be making representations to him in due course," the company said.
ITV, which had hoped for a cut to below 5%, saidthat it welcomed "the publication of the Competition Commission's report today and awaits a final decision by the Secretary of State in due course."
Secretary of State for Business and Enterprise John Hutton has until Jan. 29 to consider the report and announce final decisions. In reality, Hutton is required to agree with the commission's findings but has some room for maneuver in making decisions on the effects on media plurality and also on any appropriate remedial measures.