Sky must reduce stake in ITV

Business secretary John Hutton today backed the Competition Commission’s decision stating that Sky must reduce its 17.9% stake to below 7.5%.
The broadcaster this morning said it was considering its options but analysts believe it is likely to go to the Competition Appeal Tribunal. If that fails Sky may also be able to take the matter to the European Union.
Anthony de Larrinaga, an SG Securities media analyst, said Sky may consider taking legal action for damages from the decision, especially after trying to come to a compromise agreement.
He said: “There aren’t too many instances where you are allowed a shareholding under the law and bend over backwards offering to cede voting rights but the Competition Commission is pretty much blind to all those suggestions.”

However, it has also been pointed out that Sky’s purchase successfully stopped a likely merger with NTL or successor Virgin Media. De Larrinaga said Sky’s potential losses represented about 8% of its overall revenue margin for a year: “In that perspective, yes it hurts, but has this bought another three years of peace? That may be a price worth paying.”
Paul Richards, from Numis Securities, added: “It worked – Virgin Media seem to have moved on from a strategy that would have seen them competing head-on with Sky.”
Financial Times media expert Ben Fenton said a likely Sky appeal would focus on a 20% holding figure specified in the Communications Act.
He said it would ask why there was judged to be a problem with its 17.9% stake and where the new 7.5% maximum figure came from.