BSkyB must reduce its 17.9% stake in ITV, the Government announced this morning January 29). The ruling says that the broadcaster must reduce its holding to less than 7.5% and must not take a seat on the ITV board.
John Hutton (pictured), the †Business and Enterprise Secretary, has been backed an earlier ruling by the Competition Commission.
The decision could see Sky lose around £250m as the ITV share price has fallen from 135p to 72p since the acquisition in November 2006. Sky bought the stake for £940m.
Sky is expected to appeal the decision, although the company says it would carefully consider the findings before deciding what to do. An appeal must be lodged by Monday 25 February.
ITV says it “warmly welcomes” the Government’s decision to back the Competition Commission’s ruling that the share holding was bad for competition and not in the public interest.
Hutton has not announced how long Sky has to sell the shares.
Lord Puttnam, a key figure in drafting the Communications Act in 2003, says he is “delighted” by the decision and that it set an “important precedent” in terms of the Government backing the decision of the regulatory body.
Puttnam, who had called for the Competition Commission investigation into the deal, says the main question now is how long Sky should have to sell the shares, stating that it “should not be more than six months”.