Inquiry recommended into Sky stake in ITVOFT says move merits further examination

28 April 2007

The Office of Fair Trading has recommended that BSkyB's acquisition of a 17.9 per cent stake in rival broadcaster ITV be referred to the Competition Commission.

Trade and Industry Secretary Alistair Darling must decide whether to act on the OFT's recommendation by May 26.

OFT chief executive John Fingleton said: 'This partial ownership link between two key players raises significant competition concerns. Sky's shareholding means that ITV is no longer fully independent.'

News provision

Media regulator Ofcom added that BSkyB's acquisition of the stake for £940 million last November raised public interest concerns over the 'sufficient plurality of news provision' in the UK.

Mr Darling will also consider Ofcom's advice before making any recommendation to the Competition Commission.

The OFT launched an investigation into BSkyB's purchase of the stake in January. It said yesterday that 'a relevant merger situation' had been created which could substantially lessen competition in the UK market.

Further examination

Mr Fingleton added: 'This may alter the future competitive landscape, especially as we approach digital switchover.

'Given the high stakes for tens of millions of UK consumers, we believe these risks to competition merit further examination.'

BSkyB's move for the stake last year drew fire from Sir Richard Branson for stifling competition in the British media.

Virgin boss Sir Richard, who at the time was merging his Virgin Mobile business with cable operator NTL, saw plans for a merger between NTL and ITV scuppered by the BSkyB acquisition.

No takeover bid

BSkyB has defended the move as a sound investment and said at the time it was not planning its own takeover bid for ITV.

The company said yesterday that it would 'continue to engage fully' with regulators.

A spokesman said: 'Sky believes in choice and competition and supports an environment that fosters investment and dynamism.'

Alongside the OFT investigation, Mr Darling also asked Ofcom to examine whether BSkyB's acquisition of the stake created public interest issues.

Ofcom, which launched its own investigation in March, said the deal had implications for the provision of 'both cross media and television news' in the UK.

Numis Securities media analyst Paul Richards said: 'It was entirely as expected that the OFT would recommend a referral - that was our assumption as soon as they bought the stake.'

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