Sky’s ITV stake ‘restricts competition’

The Competition Commission has provisionally ruled that BSkyB’s 17.9% stake in ITV—purchased last November for £940m—restricts competition “and therefore operates against the public interest”. The commission’s probe was ordered in May by the then trade secretary Alistair Darling and followed earlier recommendations from the Office of Fair Trading and Ofcom. Sky’s ITV stake purchase scuppered Virgin Media’s hopes of merging with ITV.
In its provisional findings report the commission said Sky’s shareholding in ITV would “be likely to lead to a substantial lessening of competition by giving it the ability to influence ITV’s strategy”. The commission will now consult on possible remedies which could include forcing Sky to sell its ITV stake.

Competition Commission chairman Peter Freeman said: “The acquisition has made BSkyB ITV’s largest shareholder by some margin and while our provisional view is that this would not necessarily affect day-to-day operations, BSkyB would be able to influence ITV’s key strategic decisions, particularly relating to investment, whether in content, capacity or new technology.

“As a pay-TV operator, BSkyB faces competition from the free-to-air TV offer, of which ITV is an important part. BSkyB would therefore have both the ability and incentive to take advantage of opportunities to weaken ITV or prevent it from taking actions that would threaten BSkyB’s interests.”
Freeman said the commission did not think that Sky’s stake in ITV was sufficient to give rise to competition concerns in areas such as advertising and TV news provision.

“As far as the media public interest consideration is concerned, we do not think there is sufficient evidence that the acquisition will have an adverse effect, given the degree of influence that BSkyB has acquired over ITV, and ITN as its news provider, the regulatory requirements for impartiality and a strong culture of editorial independence in TV news,” he added.
The commission will send its final report to business and enterprise secretary John Hutton in December. Hutton will then decide what actions, if any, should be taken.