At some point in the next few weeks, Alistair Darling, the Secretary of State for Trade and Industry, will have to make a ruling on whether BSkyB's acquisition of a 17.9 per cent stake in ITV is against the public interest.
NTL, the cable company that was lining up a bid for ITV before Sky gatecrashed the party, believes the satellite broadcaster acted in an anti-competitive manner when it bought into ITV.
In the letters page of the Financial Times on Friday, Steve Burch, the chief executive of NTL, described Sky's actions as a "thinly veiled attempt to preclude a potential increase in competition". Mr Burch maintains that Sky's stake in ITV will lead to a "less diverse, dynamic and innovative media marketplace" because it will restrict the terrestrial broadcaster's ability to act in an unfettered manner.
According to the 2003 Enterprise Act, it now falls upon Mr Darling to make a ruling on whether Mr Burch is right. He must be wondering what crimes he committed in a past life to be presented with such a quandary.
If he sides with Sky, critics will claim that the Government does not want to aggravate Rupert Murdoch - whose News Corporation owns 39 per cent of the broadcaster (as well as The Sun and The Times newspapers) and whose son James is its chief executive - so close to a general election.
And that in itself will seemingly validate the argument that the Murdoch dynasty already owns too much of the British media industry without holding a chunk of ITV as well.
But if Mr Darling says Sky did act against the public interest in acquiring its ITV holding, his cabinet colleagues will hold him personally to blame - rightly or wrongly - whenever a Murdoch paper says something nasty about the Government.
Frankly, I would rather watch Celebrity Big Brother for 24 hours non-stop than be in Mr Darling's shoes. But given this Government's lack of backbone, I am sure political expediency will rule the day.
Queuing for Sainsbury's
A very influential City investment banker recently told me "the bloody media" made private equity takeovers in this country especially difficult. Deals nearly always got leaked before they got off the ground and were so much harder to complete in the public gaze, he argued. The unwelcome result was that private equity companies were looking to other countries to invest their billions.
The Times correctly revealed on Friday that a consortium of powerful private equity groups was lining up a bid for the supermarket group J Sainsbury. Will the revelation have any bearing on the final outcome, though? When a deal gets a public airing, everyone gets to voice an opinion. Valuations are mulled over, PR campaigns crank up and shareholders get their say as well.
But if a takeover offer is actually in the best interests of a company and its investors, then the admission that talks are taking place shouldn't really have a bearing. Publicity removes the possibility of a board accepting the private equity shilling without first giving proper consideration to the interests of their long-term shareholders.
In Sainsbury's case, it is a puzzle why Blackstone, CVC and KKR didn't move a year ago, when the shares stood at 300p, rather than the 445p at close on Thursday prior to their takeover bid being made public. So much for private equity targeting underperforming companies.
One wonders whether this bid is just the latest evidence that private equity firms have too much money to spend on too few opportunities.Reuse content