BSkyB has been ordered to reduce its stake in commercial broadcasting rival ITV by the UK Court of Appeal.
In the fourth ruling since BSkyB acquired the shareholding in November 2006, the UK courts decreed that Sky must sell the stake down to less than 7.5 per cent, in line with the Competition Commission ruling. At current prices this would entail the operator facing a potential loss of £500 million (E577m). It bought the stake for £940 million in 2006, effectively blocking NTL, now Virgin Media, from buying ITV.
The Competition Commission had already ruled that Sky’s stake gave it undue influence in the UK media and was not in the public interest.
The three court of appeal judges said: “Sky’s appeal on competition issues is dismissed, so the direction that it must reduce its shareholding to less than 7.5 per cent will stand.” The company can still appeal further to the Supreme Court however. The Appeal Court declined to refer the case to the Supreme Court but Sky can apply directly for a hearing.
BSkyB said the company noted the decision by the Court of Appeal, and would review the judgement carefully and consider next steps in due course. It is understood that BSkyB has already held talks with a number of potential buyers for the stake, which are thought to include RTL, owner of Channel Five, and Italy’s Mediaset.
BSkyB's shares were purchased at 135p, but the intervening years have seen ITV’s share price drop to a low of less than 20p. It closed at 57.85p on January 20th, valuing BSkyB’s stake at some £402 million. BSkyB has already written down the stake by £807m.