OFT consults on Sky’s stake in ITV

Cable group ntl’s hopes of agreeing a tie-up with ITV have been rekindled by Friday’s announcement by the Office of Fair Trading (OFT) that BSkyB’s purchase of a 17.9% stake in ITV may have resulted in a de facto merger. Launching a short consultation on its provisional finding, the OFT said “it may be the case that a relevant merger situation” had been created by Sky’s surprise shares raid in November.

The OFT gave interested parties a deadline of next Thursday to comment on the stake purchase, and whether it amounted to Sky “acquiring material influence over ITV”. If the OFT concludes that Sky does exert a material influence if could refer the matter to the Competition Commission, which could force Sky to sell all or part of its stake, acquired at a 16.6% premium for £940m, making Sky ITV’s largest shareholder. ITV’s board subsequently rejected a 122p-per-share offer, saying there was “little, if any, strategic logic for ITV to combine with ntl”.

Sky said it noted Friday’s announcement and would respond to the OFT “in due course”. Ntl and its largest shareholder, Sir Richard Branson’s Virgin group, said the OFT’s provisional finding supported their view that Sky’s stake purchase was “intended to give it influence over the future direction and strategy of ITV”.
Media regulator Ofcom is currently investigating whether Sky’s stake amounts to a change of control which could “affect ITV’s ability to meet its public service targets” in a probe that marks a first in the regulator’s three-year history.