BSkyB's ITV move under fire
Copyright 2006 The Scotsman Publications Ltd.
All Rights Reserved
November 21, 2006, Tuesday
By Fergus Sheppard
From Lexis Nexis
TELECOMS watchdog Ofcom yesterday said it would look at whether BSkyB's decision to buy a GBP 940 million stake in ITV could amount to a "change of control" at the broadcaster and affect its role as a broadcaster.
The broadcasting industry's regulator will investigate what impact BSkyB's decision to take a 17.9 per cent stake in ITV might have on investment in programmes. In theory, that could spark a separate Office of Fair Trading probe into whether the surprise BSkyB investment breached merger rules.
Both ITV and BSkyB shares fell yesterday as rivals to Rupert Murdoch's media empire attacked his audacious move into the popular commercial broadcaster. Sir Richard Branson, a key investor in NTL, the cable company currently in takeover talks with ITV, called BSkyB's investment a "blatant attempt to distort competition."
However, BSkyB said it had every right to invest, insisting it had not broken any merger rules, nor was it planning a takeover. A spokesman said: "Sir Richard seems to believe that he and his partners in NTL-Telewest have a unique right to acquire ITV."
BSkyB has already pledged not to make a full bid for ITV, although under the 2003 Communications Act, it can take its shareholding up to 19.9 percent.
ITV shares dipped in early trading yesterday but later regained ground to finish 1 percent or 1.25p down at 114.5p. BSkyB was also one percent or 4p down at 533p.
Julien Roch, an analyst at Merrill Lynch, said: "In our view, BSkyB destroyed 2 percent of its market capitalisation to prevent its largest competitor [NTL] potentially buying a company [ITV] which could have given the cable operator some competitive advantage in the future. This seems like a reasonable price to pay."