Sky's vote proposals unlikely to be enough
October 30, 2007
Virgin Media says proposals by BSkyB to resolve concerns over its stake in ITV do not go far enough. The satellite broadcaster has offered to surrender some voting rights over a portion of its 17.9 per cent holding to address concerns raised by the Competition Commission. But Virgin Media insists that Sky should offload the entire stake.
The Commission has proposed that Sky sell all or part of its stake, but the regulator added that it was open to other solutions. Sky says its settlement would address the commission’s main concern â€“ that Sky could block a major share issue by ITV, which would need the approval of 75 per cent of votes cast. With typical voter turnout at 71 per cent, Sky could have a blocking stake. BSkyB is proposing to place 3 per cent of its voting rights in ITV with an independent trustee, who would be free to vote as it chose, without consulting Sky management.
BSkyB held meetings with the Competition Commission last week and, in a letter published on the regulator's website, argued that with just 14.9 per cent of voting rights, it would not be able to block any strategic decisions at ITV. However, the suggestion is unlikely to convince the Commission, as it would be a “behavioural” remedy, a solution that the watchdog has already ruled out as ineffective.
Virgin Media has also written to the Competition Commission saying that “the retention of any stake by BSkyB would be prob-lematic”.