Page last updated at 11:45 GMT, Thursday, 21 January 2010

BSkyB told to cut ITV stake by court

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BSkyB is thought to have lost 500m on its ITV investment

The pay-TV group BSkyB has been ordered to reduce its stake in rival ITV by the UK's Court of Appeal.

BSkyB lost its appeal to keep the 17.9% share and was told to reduce it to below 7.5%.

It bought the stake for £940m 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.

BSkyB said: "We will review the judgement and order carefully and consider next steps in due course."

The satellite broadcaster has previously argued that it is not breaking UK media ownership laws because the stake is less than 20%.

The company maintains the deal was an investment and not designed to stop ITV being bought by rival NTL.

Further hearing?

The broadcaster has fought to retain its stake since the Competition Commission decided in late 2007 that the purchase could be against the public interest.

Early in 2008 the then Business Secretary, John Hutton, upheld the decision, and the Competition Appeal Tribunal (CAT) did likewise in September 2008.

In March 2009 the case went to the Court of Appeal for hearing, leading to the latest court decision.

"After three years of challenges by Sky, the Court of Appeal's decision should now bring this matter to a close, " a Virgin Media spokesman said.

"The court's judgement reaffirms the prior rulings... that Sky's 17.9% stake in ITV is anti-competitive. We hope Sky now reduces its stake in ITV without further delay" he added.

Giving his ruling, Lord Justice Lloyd refused permission to take the case to the Supreme Court but Sky can apply directly to that court for a hearing.

Share slump

Toby Syfret, a media analyst at Enders Analysis, said that BSkyB had lost about £500m on its investment because of the slump in ITV's share price.

The firm bought the shares at £1.35 and they now trade at around 58p each.

However, Mr Syfret pointed out that if they had been bought to stop NTL's takeover of ITV then the acquisition had served its purpose.

"In some ways ITV has benefited from BSkyB's investment because it has stopped other investors coming in. If and when the shares are sold, ITV's future is more uncertain" he added.

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Times Online BSkyB loses fight on ITV stake - 9 hrs ago
CNN Money 3rd UPDATE: BSkyB Loses Appeal, Must Now Sell ITV Stake - 15 hrs ago
BusinessWeek BSkyB Loses U.K. Ruling on Forced Sale of ITV Stake (Update3) - 16 hrs ago
Channel 4 News Sky loses legal battle over ITV stake - 17 hrs ago
Brand Republic Court rules BSkyB must reduce its 17.9% stake in ITV - 20 hrs ago

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