BSkyB to launch appeal against ITV sell-off

BSkyB said today it would launch an appeal against the Government’s decision to force it to reduce its controversial 17.9% stake in ITV.

The broadcaster said it would lodge its legal challenge with the Competition Appeal Tribunal tomorrow after being told last month to ditch more than half the holding – down to below 7.5%.

The move saw Sky take a £343m (€455m) hit in its interim figures earlier this month after the value of its ITV stake plummeted in value since being bought for £940m (€1.2bn) in November 2006.

Sky said today that the Competition Commission had built its case on “implausible hypotheses”.

2 CITY BSkyB

Business Secretary John Hutton ordered the share sale in support of the Commission's findings, which deemed that the stake purchase had caused a merger to take place and that its holding prevented ITV from pursuing an independent strategy.

Sky chief executive Jeremy Darroch said: “The Competition Commission has failed to meet the burden of proof required to justify its conclusions.

“It has built its case on a series of implausible hypotheses and has recommended an arbitrary remedy for a non-existent problem.

“The reality is that competition in this marketplace is as vigorous as ever - a merger has not taken place, Sky and ITV are distinct entities with independent strategies and Sky could not block a shareholder resolution without voting rights.”

The group added that the decision to force a sale to below 7.5% was “unreasonable and disproportionate”.

Sky posted a first-half loss of £112m (€148m) after the hefty write-down on the stake – the first time that Sky had slipped into the red for six years.

The holding is now worth less than two-thirds of the original amount paid, with ITV shares last month hitting an all-time low amid fears that an economic slowdown would trigger an advertising downturn.

The Commission said today it would “defend its case vigorously”.