Sky forced to drop ITV holding

UK broadcaster BSkyB has been told to offload the majority of its holding in rival ITV, on recommendation from the Competition Commission.

John Hutton, secretary of state for business and enterprise, said Sky must reduce its stake in ITV from 17.9 per cent to less than 7.5 per cent, and must not sell the shares to anyone associated with Sky.

Sky bought the stake last year, just days after cable giant NTL, now known as Virgin Media, approached ITV with a merger offer of its own. Ofcom subsequently investigated and the authorities seem agreed that the move poses some competitive problems.

Alan Flitcroft, head of media and entertainment at Ernst & Young, said: “John Hutton’s decision to follow the recommendations of the Competition Commission is unsurprising.  What will be interesting is to see if BSkyB challenge this ruling. It has been reported that as far as BSkyB were concerned, their ownership stake was less than the 20 per cent limit set by the Communications Act, so the decision must be very frustrating for them.”

BSkyB has one month to lodge an appeal.