From Reuters:
UK COURT DENIES BSKYB APPEAL OVER KEEPING ITV STAKE.
And from Jane Croft, the FT’s law correspondent:
BSkyB will have to sell its controversial stake in ITV, the Court of Appeal ruled on Thursday.
In the fourth ruling on the matter, the court ruled that Sky would have to reduce its stake in ITV to below 7.5 pc and also denied Sky permission to appeal to the Supreme Court although Sky can appeal seperately to the Court.
Sky has been trying to retain the holding for the past two years following a Competition Commission ruling. At the time its acquisition was thought to be aimed at thwarting Virgin Media(then called NTL) from merging with ITV. However Sky could now face losses if it sold the shares which it acquired at 135p.
(Note Sky controls a 17.9 per cent stake in ITV).
This has indeed proved to be a poor investment — in terms of profit and loss — by then Sky-boss James Murdoch (ITV shares are currently around 57p). Although, as noted above, it did scupper any plans NTL might have had to merge with ITV.
So what happens next?
Traders reckon Sky will appeal and, if that fails, it could well take its case to Brussels.
And that probably explains why the share prices of ITV and BSkyB have barely budged following the news:
This case is going to rumble on for a while longer.
The latest from Sky meanwhile is this (via Reuters):
BSkyB notes the decision by the Court of Appeal in relation to BSkyB’s shareholding in ITV. We will review the judgement and order carefully and consider next steps in due course.
Update:
Latest take from the FT’s media team with an interesting line on potential buyers of this stake. This too could be providing some support for the price.
BSkyB will have to sell its controversial stake in ITV, the Court of Appeal ruled on Thursday, leaving the pay-TV company with a potential loss of £500m. In the fourth ruling on the matter, the court ruled that BSkyB would have to reduce its 17.9 per cent stake in ITV to below 7.5 per cent.
BSkyB has been trying to retain the holding for the past two years following a Competition Commission ruling that the stake gave BSkyB undue influence in the UK media and was not in the public interest.
The company is taking legal advice on whether to appeal directly to the Supreme Court and has 28 days to do so. BSkyB is unlikely to win another appeal, according to media analysts, and is undecided about whether to divest to 7.5 per cent or sell the whole stake.
The company has been approached by both strategic and financial buyers, which are likely to include Mediaset, the Italian media group controlled by Silvio Berlusconi, and RTL, the owner of channel Five.
However, would Sky really sell the stake to a rival? Probably better to take advantage of Archie Norman’s honeymoon period at ITV and place say 10% into the market. If that is Sky doesn’t take the matter to Brussels.
Related link:
ITV attacks regulator’s ad decision – FT