BSkyB Must Sell Shares, Says Hutton

Broadcasting giant BSkyB has today been forced to pull back from its involvement at ITV on competition grounds, following a detailed ruling by the Competition Commission on the terms of the relationship between the two companies, which has seen BSkyB gather substantial influence since it finalised its 17.9% equity stake back in 2006.

The decision today came from Business Secretary John Hutton, following an investigation into the deal finalised over a year ago in which BSkyB invested some £940 million in its stake, which will now see the company realising a substantial loss in the deal as a result of the subsequent drop in share value.

As a result, BSkyB have been forced to drop their holding to just 7.5% and forgo any rights to occupy a seat on the board of directors, over concerns that they would otherwise harbour too much influence over the strategic decision making within ITV, which the Commission ruled would be contrary to the interests of competition.

Whilst the ruling was given today in no uncertain terms, it was not specified nor established how long BSkyB would have to reduce its holding, which is a factor that looks set to feature in the next few weeks.

ITV have reacted positively to the decision today, whilst the BSkyB board have said they will take time to consider their options before acting on the findings, which will almost inevitably render around a 50% loss on acquisition price, without taking into consideration inflation.

From the outset the deal was subject to controversy, with Virgin Media accusing BSkyB of operating with a view to blocking it from launching a potential takeover of the company, whilst BSkyB maintained its motives were merely financial and for investment purposes.

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