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January 29, 2008

BSkyB will loose half its stake in ITV


by Alan Harten
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BSkyB Loose stake in ITV

It is expected that BSkyB will today, be instructed to sell off more than 50% of its shares in ITV, following over a year of legal wrangling with regulatory authorities, and negotiation, with TV competitors; it looks like their participation in ITV will come to an end.

This ruling will undoubtedly cost Rupert Murdoch’s company several hundreds of millions of pounds.

It seems certain that John Hutton, Business and Enterprise Secretary, will now inform the TV company that it will now have to sell its 18% holding in ITV, the UK’s biggest commercial TV broadcaster, to bring down its ownership to near 7%.

It looks like the bad news will be confirmed early this morning, before stock market begins business.

The current Labour Government is not known for taking action against Mr Murdoch’s huge media empire. It was originally believed that sky would have to dump its shares within just 12 weeks; it is now thought that the announcement this morning will give them up to 9 months to reduce their holdings.

James Murdoch, son of Rupert Murdoch, put out over £940m to buy the shares in ITV back in 2006. In a bold manoeuvre, that had the aim of usurping a bid for ITV by NTL, now named Virgin Media, of which Richard Branson owns the 11%.

There have been protracted battles between the two companies, including sky, removing several channels from Virgins cable network in an argument over fees.

The Competition Commission has previously ruled that BSkyB’s stake in ITV was “uncompetitive.” By forcing this reduction in the company’s shareholding down to around seven and a half percent, the commission claimed it would be reducing the chances of BSkyB influencing decisions made by rival ITV.

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