Rupert Murdoch’s BSkyB is facing losses of hundreds of millions of dollars on its stake in British free-to-air network, ITV, after the UK Government confirmed a regulator’s order to sell more than half its 17.9% stake.
The ruling by the Government, which came overnight, raises the prospect of legal action from BSkyB.
Business and Enterprise Secretary John Hutton said BSkyB has to cut its 17.9% stake in Britain’s largest commercial broadcaster to less than 7.5%.
But Murdoch will have up to nine months to sell, so as to reduce the prospect of a near fire sale.
The move will be seen as a rare example of the Labour Government finding against Mr Murdoch’s vast media empire.
Son James, who was chief executive of BSkyB, spent £940 million (or more than $A1.9 billion) buying the stake in November 2006 to block (which it did) a bid for ITV by NTL, the cable company since rebranded Virgin Media in which Sir Richard Branson is the biggest individual shareholder with an 11% per cent stake.
Britain’s Competition Commission ruled that Sky’s stake in its rival was “uncompetitive.” and ordered it to be cut to less than 7.5% to reduce the ability of the Murdoch empire to influence ITV’s strategy, especially its ability to make share placements and raise new capital.
On Monday night, ITV shares closed at 72p, 47% below the 135p a share that Sky paid. Selling down to below 7.5% would leave Sky with losses topping £250 million ($A500 million).
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