LONDON, Jan 29 (Reuters) – Britain ordered BSkyB on Tuesday to reduce its 17.9 percent stake in broadcaster ITV to below 7.5 percent because the purchase was anti-competitive, potentially costing the company around 250 million pounds.
Secretary of State for Business and Enterprise John Hutton also ordered BSkyB not to sell the shares to an “associated person”, nor to seek representation on the board of ITV and not to reacquire shares in the broadcaster.
But he said he would not disclose the time period given to BSkyB for the sale, following a request from the company.
The ruling could cost BSkyB around 250 million pounds ($495 million) if it sold at Monday’s closing share price, since the value of the shares has dropped since the purchase.
ITV welcomed the ruling and said it was in the best interests of the overwhelming majority of its shareholders, while BSkyB said it would give careful consideration to the announcement and confirm any further steps in due course.
Shares in ITV initially opened up 2 percent before settling at 0.8 percent up at 72.6 pence at 0805 GMT. Shares in BSkyB were up 0.6 percent at 534 pence.
BSkyB, Britain’s dominant pay-TV firm, paid 135 pence per share, or 940 million pounds, for its stake in ITV in November 2006, in a move which effectively blocked cable group NTL — now part of Virgin Media — from buying ITV.
The move caused uproar with legislators and rivals condemning the actions of the then Chief Executive, James Murdoch, while Virgin Media’s largest shareholder, Richard Branson, labelled Sky and the Murdochs a threat to democracy.
But analysts say the News Corp. controlled broadcaster is likely to have succeeded in preventing Virgin Media from buying ITV due to the current market environment.
BSkyB has previously said it is a long-term investor, and it now has up to four weeks to contact the Competition Appeal Tribunal if it decides to appeal.
Hutton said he had decided to impose the remedies recommended by the Competition Commission to address the “substantial lessening of competition” identified in their report.
BSkyB had offered to put all its ITV shares in an independent voting trust which would have complete freedom over voting decisions, but the government decided this would need continual monitoring.
