BSKYB could face a loss of about £200 million on its stake in ITV after the Competition Commission ruled the purchase of part of its rival was anti-competitive.
Yesterday, in a preliminary decision, the competition watchdog said the stake "would be likely to lead to a substantial lessening of competition by giving [BSkyB] the ability to influence ITV's strategy".
The satellite television company, part of
Rupert Murdoch's media empire, paid £940m for the 17.9 per cent shareholding last November at 135p a share, when ITV's shares were trading at 115.5p.
BSkyB could nurse a heavy loss from a sale. Since the purchase, ITV shares have fallen to about 100p, valuing the rival's stake at £720m. Yesterday the shares climbed 3.75 per cent to 105p, but at that price BSkyB would still face a loss of about £200m.
The Competition Commission has given interested parties until 23 October to submit responses, after which it will report to the government on possible "remedies" to the situation by December.
These include a full sale of the stake or a partial sale, down to a point where BSkyB would no longer hold a "material influence". Enterprise Secretary John Hutton will make the final decision over any possible action.
ITV has told regulators that Sky's 17.9 per cent stake could translate to an "interest" amounting to more than 25 per cent, given that many shareholders do not vote on company resolutions.
Peter Freeman, chairman of the commission, said: "The acquisition has made BSkyB ITV's largest shareholder by some margin and while our provisional view is that this would not necessarily affect day-to-day operations, BSkyB would be able to influence ITV's key strategic decisions, particularly relating to investment, whether in content, capacity or new technology."
BSkyB bought the stake last year to thwart a potential merger of ITV and cable operator NTL, which has since become Virgin Media.
Analysts at Dresdner Kleinwort said the ruling brought a forced sale a step closer, and said the development was likely to revive interest in a bid from Virgin Media or RTL.
Virgin Media would not comment on a possible bid, but said the findings were "a major step towards addressing the problems caused by Sky's stake in ITV".
Last year Sir Richard Branson accused BSkyB of "reckless and cynical attempts to stifle competition and secure creeping control of the British media".
A spokesman for BSkyB said it would continue to engage with the commission throughout the process.
