Sky may be forced to sell ITV stake

BSkyB’s 17.9% stake in ITV restricts competition, according to a provisional ruling by the Competition Commission. The regulator says the stake, bought for £940m late last year, allows Sky to influence ITV strategy and “operates against the public interest”.

The commission has also ruled that it will not have an adverse affect on advertising or TV†news. It has now launched a consultation on what action to take; measures could include forcing the sale of the stake.†

The Competition Commission notes that the acquisition has made Sky the largest shareholder in ITV “by some margin”.

It adds: “Whilst our provisional view is that this would not necessarily affect day-to-day operations, BSkyB would be able to influence ITV’s key strategic decisions, particularly relating to investment, whether in content, capacity or new technology.

“As a pay-TV operator, BSkyB faces competition from the free-to-air TV offer, of which ITV is an important part.

“BSkyB would therefore have both the ability and incentive to take advantage of opportunities to weaken ITV or prevent it from taking actions that would threaten BSkyB’s interests.”

The stake was referred to the commission in May after the Office of Fair Trading said the situation cast doubt on ITV’s independence. Sky’s acquisition of the stake in November 2006 effectively blocked cable rival NTL, now Virgin Media, from buying or merging with the commercial broadcaster.

A Sky spokesman says:”We will continue to engage with the commission during the remainder of this process.”

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