Broadcaster BSkyB has been ordered to sell down it’s 17.9 per cent share in broadcaster ITV to below 7.5 per cent after losing an appeal with the Competition Appeal Tribunal.
At the hearing on Monday BSkyB appealed against the tribunal’s original ruling in December, but the tribunal dismissed the appeal and in a written judgement said: ‘our view there is no substance in Sky’s complaint.”
The tribunal also ruled that Business Secretary John Hutton and the Competition Commission were incorrect in concluding that the stake did not have an impact on media plurality and supported the argument from rival broadcaster Virgin Media that the Commission had been too lenient.
Media Lawyers told The Financial Times that this could mean tougher approach to mergers in the broadcast media sector in the future. ‘This ruling confirms that for now Sky will have to sell to below 7.5 per cent, but things could get even worse,’one lawyer said. ‘Virgin succeeded in arguing that the public interest had not been properly looked at by the Competition Commission. Sky might be ordered to sell even more.”
Speculation has already begun on possible bidders for the shares, which fell almost 7 per cent ahead of the ruling.
Media bankers told the FT that the ruling would not spark an immediate bid for the whole of ITV unless the price fell sharply, and ruled out private equity interest due to the state of the credit markets.
‘I just don’t see anyone coming in for the whole stake at this point, If you wanted to buy ITV, then buying the stake signals your intentions and pushes the price way up. Better to let it bleed to death,’said one banker.
Analysts who spoke to Media Guardian also ruled out a bid for the whole of ITV, but didn’t rule out private equity interest for the shares, also speculating that the most likely contender to buy the shares is Channel Five Owner RTL.
One analyst said: “I don’t think there will be an immediate buyer [for the stake], however, over the next nine months there is a 40% chance that either RTL/Bertelsmann or private equity will buy the stake.”