From Colin Mann in London
The UK's anti-trust watchdog, the Competition Commission has recommended that BSkyB should be forced to sell some of the 17.9 per cent stake in ITV it acquired in November 2006. The regulator has recommended to Business Secretary John Hutton that BSkyB should either sell all of its shares or cut its stake to below 7.5 per cent and promise not to take a seat on ITV’s board. Hutton has until 29 January to decide what action to take on the report’s findings.
The Commission suggested that BSkyB’s stake would be big enough to allow it to block special resolutions and that it “would limit ITV’s strategic options, for example its ability to raise funds”. Concern was also expressed as to the effect on programming. “Given its interests as a competitor and despite its interests as a shareholder, we believed that BSkyB would have the incentive to reduce ITV’s investment in content,” concluded the report.
A statement from BSkyB said: “The next phase of this process lies with the Secretary of State. We will be making representations to him in due course.” ITV welcomed the publication of the report and said that it awaited “a final decision by the Secretary of State in due course”.
BSkyB contends that it has not sought to influence ITV and when it bought that stake in November 2006 it did so as an investment. It spent £940 million (E1,300) buying the stake, but the Commission suggested that it was unlikely that BSkyB would have chosen to invest in ITV “purely as an investment vehicle,” and dismissed BSkyB’s argument that it had bought the shares because they were cheap. It bought the shares at £1.35. Wednesday's closing price of £0.83, would mean BSkyB would incur a significant loss if forced to sell.