Sky in damage limitation move over ITV stake disposal
LONDON - BSkyB is to ask the secretary of state for business John Hutton to allow it to place its ITV stake in a special trust, after the Competition Commission recommended the satellite broadcaster be forced to reduce its holding to less than 7.5%.
The satellite broadcaster will also ask to be allowed 17 to 20 months to sell off the holding if the company is forced to reduce its 17.9% stake to 7.5%.
Hutton has until January 29 to decide whether to follow advice from the Competition Commission, announced yesterday.
Sky would forego voting rights by placing its holding in an arm's length trust. The Commission has already rejected this course in its advice to government, on the grounds that it would be too complicated to monitor.
The satellite broadcaster could take legal action if it is forced into a loss-making sale of part of the stake, a move it has not yet ruled out.
Sky's investment was made at 135p per ITV share, but shares were trading at 84.4p yesterday, almost a record low. If Sky had to sell the shares at the current price, it would lose £209m.
The debate is now likely to focus on how long Sky has to dispose of its holding. Six months is considered normal in these circumstances, but the company is planning to ask for 17 to 20 months.
However, ITV wants the satellite group off its shareholder register within three months.
Sky acquired its stake in ITV in a surprise overnight swoop in November 2006, at a time when the commercial broadcaster was trying to fend off a takeover bid by Virgin Media.
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