BSkyB denies it could influence ITV decision-making

Broadcasting giant BSkyB told regulators it is “fanciful” to suggest that it could influence ITV’s decision-making through its 17.9% stake in the rival, it emerged today.

The group, which is part-owned by Rupert Murdoch’s News Corporation, said in its submission to the Competition Commission inquiry into its controversial holding that it had no leverage over ITV policy or its boardroom decisions.

BSkyB argued in its 68-page defence submission – made public for the first time today – that the stake was merely an investment made at a time when the group was the subject of intense takeover interest.

Sky added it was “constantly evaluating possible investment opportunities that may be available to it”.

The group’s £940m (€1.4bn) move last November to snap up the ITV shares caused controversy by scuppering Virgin Media’s ITV merger plans, drawing fire from major Virgin Media shareholder Richard Branson.

Sky’s share acquisition was investigated by the Office of Fair Trading and Ofcom, which concluded that the stake raised “significant” competition and public interest concerns, leading to the launch of the Competition Commission inquiry in May.

But Sky has always maintained that it has not broken any merger rules and can take its stake up to 19.9% under the Communications Act.

The 2002 Enterprise Act, however, prevents any shareholder with more than 15% of a company having material influence over the commercial operations of another firm.

The competition watchdog’s probe into Sky’s holding has also thrust major shareholder News Corporation into the spotlight after the commission said earlier this week its inquiry would encompass the group’s UK newspaper interests, including The Times, the Sunday Times, the Sun and the News of the World.

Sky said in its submission that News International’s media interests were “irrelevant” and should be left out of the investigation.

ITV’s submission to the inquiry was also published today, stating that it had concerns over Sky’s potential influence over policy, but did not object to BSkyB’s shareholding with sufficient safeguards in place.

The broadcaster also said that it believed Ofcom may have “over-stated the case” in relation to its concerns over media public interest issues.

The commission has so far identified six potential ways in which Sky’s holding could result in a “substantial lessening of competition”.

These cover the possible loss of competition in the premium pay-TV market, the sports rights bidding process and the provision of television news, with the holding creating a link between Sky News and ITN, which provides news to ITV.

Rival broadcasters have lined up to condemn Sky’s ITV holding in their submissions to the inquiry, with Channel 4 and the BBC voicing fears over the implications of the deal.

The commission aims to report back with preliminary findings in mid-September, with the deadline for its final report to be sent to the newly created Department of Business, Enterprise and Regulatory Reform by November 7.