Watchdog set to demand cut in Sky’s ITV stake

THE Competition Commission is expected to send its final verdict on BSkyB’s controversial 17.9% stake in rival ITV to the Government by the end of the week.

THE Competition Commission is expected to send its final verdict on BSkyB’s controversial 17.9% stake in rival ITV to the Government by the end of the week.

The watchdog is understood to be outlining a recommendation that Sky cuts its stake to between 5% and 10% within six months of the official decision, according to the Financial Times.

The Commission provisionally found in October that Sky’s holding operated “against the public interest” and restricted competition.

Sky could make substantial losses if it is forced to sell down the stake, bought for £940m last November and now worth less than £600m, based on the latest share price.

ITV shares have fallen by more than a third in value since BSkyB made the move to snap up the stake amid falling net advertising revenues and profits.

But John Hutton, the Business, Enterprise and Regulatory Reform Secretary, has the final say on action that should be taken to address the public interest and competition findings, within a month of receiving the Commission’s report to give his own ruling.

While he does not have to make the Commission findings public until he announces his conclusions, a national newspaper report says that the Department for Business and Enterprise is preparing to publish before Christmas.

A spokesman remained tight-lipped on the exact timing, but confirmed the Government intends to “publish relatively early, perhaps before the final decisions are made”. Such a move would raise eyebrows, given the pressure that Mr Hutton could find himself under to accept the same findings and recommendations from the Commission.

According to the Department for Business and Enterprise, he is duty bound to accept the findings of the competition inquiry, but can make his own conclusions entirely on the public interest probe.

BSkyB has offered in a submission to the Commission to give up the voting rights on 3% of its holding in the hope of being able to avoid a sell-down.

However ITV has urged the competition regulators to demand a complete sale of the stake, although in the same submission it said it would be prepared to accept a cut to 4.9% if Sky was denied a seat on the board.

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