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BSkyB criticised over ITV stake BSkyB criticised over ITV stake
(21 minutes later)
BSkyB's purchase of a 17.9% stake in ITV restricts competition, a provisional ruling by the regulator probing the deal has concluded.BSkyB's purchase of a 17.9% stake in ITV restricts competition, a provisional ruling by the regulator probing the deal has concluded.
The Competition Commission said the share, bought for £940m in 2006, would allow BSkyB to influence ITV strategy.The Competition Commission said the share, bought for £940m in 2006, would allow BSkyB to influence ITV strategy.
But it said it did not believe the stake brought competition concerns in areas such as advertising or TV news.But it said it did not believe the stake brought competition concerns in areas such as advertising or TV news.
The commission will now consult on what could be done, including possibly forcing the sale of the stake.The commission will now consult on what could be done, including possibly forcing the sale of the stake.
Influential positionInfluential position
The purchase made by satellite network BSkyB's "operates against the public interest" the watchdog said.The purchase made by satellite network BSkyB's "operates against the public interest" the watchdog said.
BSkyB would therefore have both the ability and incentive to take advantage of opportunities to weaken ITV Competition Commission See BSkyB share priceBSkyB would therefore have both the ability and incentive to take advantage of opportunities to weaken ITV Competition Commission See BSkyB share price
"The acquisition has made BSkyB ITV's largest shareholder by some margin," it added."The acquisition has made BSkyB ITV's largest shareholder by some margin," it added.
"Whilst our provisional view is that this would not necessarily affect day-to-day operations, BSkyB would be able to influence ITV's key strategic decisions, particularly relating to investment, whether in content, capacity or new technology."Whilst our provisional view is that this would not necessarily affect day-to-day operations, BSkyB would be able to influence ITV's key strategic decisions, particularly relating to investment, whether in content, capacity or new technology.
"As a pay-TV operator, BSkyB faces competition from the free-to-air TV offer, of which ITV is an important part."As a pay-TV operator, BSkyB faces competition from the free-to-air TV offer, of which ITV is an important part.
"BSkyB would therefore have both the ability and incentive to take advantage of opportunities to weaken ITV or prevent it from taking actions that would threaten BSkyB's interests," the Competition Commission said in its findings."BSkyB would therefore have both the ability and incentive to take advantage of opportunities to weaken ITV or prevent it from taking actions that would threaten BSkyB's interests," the Competition Commission said in its findings.
A BSkyB spokesman said they noted the findings and possible remedies and that the firm would "continue to engage with the Commission during the remainder of this process".A BSkyB spokesman said they noted the findings and possible remedies and that the firm would "continue to engage with the Commission during the remainder of this process".
When BSkyB bought the stake in November 2006, rival Virgin Media - which runs a cable network - was planning to merge with ITV. It's quite big stuff from the Commission and it's a slap to BSkyB Robert Peston, BBC business editor class="" href="http://www.bbc.co.uk/blogs/thereporters/robertpeston/2007/10/protecting_free_tv.html">Read Robert's thoughts in full When BSkyB bought the stake in November 2006, rival Virgin Media - which runs a cable network - was planning to merge with ITV.
A Virgin Media spokesperson said the Competition Commission's findings were "a major step towards addressing the problems caused by Sky's stake in ITV".A Virgin Media spokesperson said the Competition Commission's findings were "a major step towards addressing the problems caused by Sky's stake in ITV".
Virgin Media called for "strong remedies" that would ensure BSkyB would "not be permitted to remain in a position where there is any question whatsoever about its ability to influence ITV".Virgin Media called for "strong remedies" that would ensure BSkyB would "not be permitted to remain in a position where there is any question whatsoever about its ability to influence ITV".
'Major step''Major step'
Critics argued that BSkyB's move was aimed at preventing such an outcome, but BSkyB said it was investing in an undervalued company with significant growth potential.Critics argued that BSkyB's move was aimed at preventing such an outcome, but BSkyB said it was investing in an undervalued company with significant growth potential.
Sky should not be permitted to remain in a position where there is any question whatsoever about its ability to influence ITV Virgin MediaSky should not be permitted to remain in a position where there is any question whatsoever about its ability to influence ITV Virgin Media
Ministers referred BSkyB's stake to the Competition Commission in May, after the Office of Fair Trading said the situation cast doubt on ITV's independence.Ministers referred BSkyB's stake to the Competition Commission in May, after the Office of Fair Trading said the situation cast doubt on ITV's independence.
Speaking to the BBC, Peter Freeman, chairman of the Competition Commisssion said its concern was about "the effect of this shareholding on the market going forward".Speaking to the BBC, Peter Freeman, chairman of the Competition Commisssion said its concern was about "the effect of this shareholding on the market going forward".
In reaction to the ruling, Virgin Media said: "The Competition Commission's provisional findings are a major step towards addressing the problems caused by Sky's stake in ITV".In reaction to the ruling, Virgin Media said: "The Competition Commission's provisional findings are a major step towards addressing the problems caused by Sky's stake in ITV".
"Sky should not be permitted to remain in a position where there is any question whatsoever about its ability to influence ITV," said the firm."Sky should not be permitted to remain in a position where there is any question whatsoever about its ability to influence ITV," said the firm.