BSkyB shares soar after good news on OFT ruling
LONDON - Shares in BSkyB were providing one bright spot for London media shares, trading up by around 5% this afternoon, after the news that it had been cleared of acting uncompetitively.
BSkyB shares were up by 5.03%, or 31.5p, at 2.30pm, to trade at 658p.
Earlier today, the OFT said it had completed a three-year investigation into BSkyB, saying there was insufficient evidence to prove allegations that the broadcaster was behaving anti-competitively. It had been accused of overcharging for its channels by the now-collapsed digital terrestrial service ITV Digital.
ITV Digital, which was owned by ITV companies Carlton Communications and Granada, had claimed it could not make a profit by selling Sky's channels on to subscribers without charging a high price for them, which it argued discouraged consumers from signing up to ITV Digital. BSkyB was also accused of offering discounts to distributors for selling more of its channels, known as mixed bundling.
The OFT said in its report that BSkyB is "dominant in its market for the wholesale supply of pay channels with certain premium sports and film content". However, John Vickers, director general of the OFT, said: "We have concluded that BSkyB is dominant in the supply of premium channels. On the key issue of the alleged margin squeeze against rivals, we found that BSkyB to be around the borderline of anti-competitive behaviour. Overall, there are not sufficient grounds to conclude that BSkyB has broken competition law."
Other media shares were down, as the FTSE-100 index fell by 0.7% to 3,956.1 points. Carlton Communications was down by 1.76% to 139.5p and Granada was off by 3.5%, trading at 82p.
Among the advertising groups, WPP Group was down by 2.25% at 466.75p, while Aegis Group was another rare bright spot, up 1.3% at 80p.
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