Commission to probe Sky's ITV stakeGovernment says fuller investigation needed

25 May 2007

BSkyB's acquisition of a 17.9 per cent stake in ITV was referred to the Competition Commission for detailed investigation today.

Trade and Industry Secretary Alistair Darling made the move after considering reports from the Office of Fair Trading and media regulator Ofcom.

BSkyB bought the stake for £940 million in November, but 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 the new company and ITV effectively scuppered by the BSkyB acquisition.

The investigation will look at the effect of the transaction on competition, as well as consider public interest issues relating to the 'plurality of persons with control of media enterprises'.

BSkyB is 39 per cent-owned by Rupert Murdoch's News Corporation. Mr Murdoch is chairman of the pay-TV operator.

Fuller investigation

Mr Darling said: 'My decision reflects consideration of the reports I have received from both the Office of Fair Trading and Ofcom and of other representations I have received about this matter.

'On the basis of the evidence before me, a fuller investigation by the Competition Commission is justified.'

The commission will have 24 weeks to complete its investigation.

BSkyB has described its ITV stake as a sound investment and said recently that it would 'continue to engage fully' with regulators.

In February Mr Darling asked the OFT and Ofcom to look into the acquisition, which they did by the end of April.

Impact on competition

The OFT said it believed a merger situation had been created and that it may be expected to result in a substantial lessening of competition.

Ofcom said the transaction raised public interest issues relating to the plurality of news provision in the UK for both cross-media and television news.

The public interest test has never before been used.

ITV has remained largely silent on the issue, although chairman Michael Grade has highlighted concerns that the BSkyB stake, when combined with recent voting patterns, would be sufficient to block a vote requiring a 75 per cent majority.

The Competition Commission could ask BSkyB to reduce or sell its stake, give up voting rights or take no action at all.

BSkyB said in a statement: 'Sky notes today's announcement by the Secretary of State for Trade and Industry. We look forward to engaging with the Competition Commission as the ongoing regulatory process enters its next phase.'

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