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British Sky Broadcasting is expected to appeal Tuesday’s ruling by business and enterprise secretary John Hutton that it must slash its 17.9% stake in commercial broadcaster ITV to less than 7.5% on competition grounds.
Shares in the News Corp.-controlled satellite TV giant moved slightly higher on the ruling, even though a forced fire-sale could cost Sky as much as £200 million ($398 million) to offload the ITV share at current market prices. A time frame for the sale has not been disclosed.
Former BSkyB CEO James Murdoch swooped on the stake in a £940 million raid in November 2006, paying £1.35 per share for ITV stock that now is trading at half that value.
ITV shares also were marginally up at 73 pence ($1.45), despite fears that the broadcaster’s vulnerable stock will continue to fall if BSkyB’s 400 million shares flood the market.
BSkyB said only that it “noted” the decision and would “give careful consideration to the announcement and confirm any further steps in due course.” However, analysts predict that BSkyB will unveil its next move next week at its quarterly earnings conference.
“On the face of it, (BSkyB) has complied with the requirements of the Communications Act and can point to a number of minority situations where significant equity holders in one company have continued to control a competitor company,” Ingenious Securities analyst Patrick Yau said.
UBS Investment Research’s Daniel Kerven said an appeal would give BSkyB more time to sell. “BSkyB has four weeks to appeal the decision. If it were to do so, an appeal could drag the process on for another six months, after which BSkyB may have several extra months to sell its stake,” he said in a note.
ITV executive chairman Michael Grade “warmly” welcomed the government ruling. “This decision is in the best interests of the overwhelming majority of our shareholders,” he said.
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