Sky appeals against ITV share sale order
BSkyB will launch a formal appeal today against the Competition Commission's ruling that it must sell more than half of its 17.9 per cent stake in rival broadcaster ITV at a cost of hundreds of millions of pounds.
The satellite broadcaster will ask the Competition Appeal Tribunal to quash the findings of the regul-ator, which in December ordered it to reduce its holding in ITV to below 7.5 per cent. The Commission would then have to look again at its findings, which were backed last month by John Hutton, the Minister for Business, who has responsibility for competition issues.
Yesterday, Sky accused the Commission of making key mistakes during its investigation into the broadcaster, which lasted for more than six months.
The broadcaster is furious that despite offering a series of concessions designed to appease concerns about its holding in ITV, it has still been told it must sell the majority of its shares, with the comm-ission concluding that Sky's stake was damaging for competition and would enable it to exert unfair influence over ITV.
As a result of the ruling, Sky was forced this month to include a £343m write-down on the value of the ITV stake in its first-half results, which led to the company reporting a loss for the first time in six years. ITV shares have fallen by more than 40 per cent since Sky made its purchase.
The broadcaster's appeal is based on three arguments. Sky will say that its stake in ITV does not constitute a merger between the two companies and that its investment has not prevented ITV from pursuing an independent commercial strategy. Sky is also claiming that even if these two challenges to the regulator's findings were to fail, the extent of the disinvestment ordered is "unreasonable and disproportionate".
Sky has argued that its purchase of £940m of ITV shares in November 2006 was a strategic investment, rejecting accusations that it was trying to block a merger between the company and Virgin Media, which was being discussed at the time.
Jeremy Darroch, Sky's chief executive, said the company's offer to waive voting rights attached to its shares should have assuaged regulatory concerns. He said: "Sky and ITV are distinct entities with independent strategies and Sky could not block a shareholder resolution without voting rights."
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