Virgin rages at Sky's £940m ITV share raid

Branson demands Murdoch competition inquiry

Sir Richard Branson, founder of the Virgin Group of companies, is to demand that competition authorities in the UK and continental Europe launch an inquiry into the acquisition of a £940m stake in ITV by BSkyB.

The satellite group announced it had snapped up the 17.9 per cent holding in ITV on Friday evening, in a move that has scuppered a planned takeover of the beleaguered broadcaster by NTL, the cable group in which Sir Richard has an 11 per cent stake.

BSkyB said on Friday that the acquisition of the stake would have no impact on competition and that it intended to be a long-term shareholder in ITV. It added that it had no intention of proceeding with a takeover bid of its own.

However, the move will make it impossible for NTL to proceed with its offer. The cable group was relying on offsetting future tax on profits from the proposed enlarged group against £15bn of historic losses. But it could only do so by owning 100 per cent of ITV - a scenario now rendered impossible by BSkyB buying into the broadcaster.

A merger of NTL and ITV would have created a media powerhouse with the size to challenge BSkyB, which is 39 per cent owned by Rupert Murdoch's News Corporation.

A banker with links to NTL said: "BSkyB is blatantly trying to block consolidation in the sector and in doing so it is being anti-competitive."

Shares in ITV are expected to fall steeply tomorrow when it becomes clear that the company is no longer a takeover candidate. BSkyB paid 135p per share for its ITV stake, compared with the company's closing price on Friday of just 115.75p. It is believed NTL was planning on making a 125p per share bid for ITV.

ITV said on Friday that it "looks forward to discussions with BSkyB in due course".

Sir Richard Burt, the ITV chairman, was only told of BSkyB's intentions in a short phone call after the announcement to the stock market had been made.

BSkyB shareholders were not consulted prior to the £1bn raid on ITV's shares. It is believed that the satellite company acquired most of its ITV stake from Fidelity.

Sir Richard acquired his NTL holding after selling Virgin Mobile to the cable company earlier this year for £962m.