A decision is expected tonight our time on whether Rupert Murdoch’s 38% associate, BSkyB, will have to sell its 17.9% blocking stake in US terrestrial commercial TV group, ITV.
The UK’s Competition Appeals Tribunal will announce its decision on the British Sky Broadcasting’s ITV stake: full or partial sale is tipped to be the decision. That will most likely be appealed by Murdoch and his son James, who did the deal, to try and stop someone from buying ITV and possibly creating a solid commercial rival to BSkyB, which is now the dominant commercial broadcaster in the UK.
RTL, part of the Bertlesmann group from Germany, or even the Mediaset group of Silvio Berlusconi are said to be possible bidders for ITV if the Murdoch shares are forced onto the market.
Even if the Murdochs appeal and hold on to their stakes, a bid might force their hands as they have had losses of 616 million pounds on the stake. ITV shares are trading around 44 pounds, more than 90p under what Murdoch paid for them.
But the credit crunch and financial crisis would rule out any corporate activity for months until financial markets recovery their confidence in companies.
The UK Competition Commission ruled late last year that BSkyB’s holding gave it an ability to influence ITV’s strategy in a way that restricts the market. That ruling was accepted by the Labour Government and sparked the Murdoch appeal.
Murdoch’s dominant position in the UK broadcast media has been strengthened by the loss of financial strength at the terrestrial Government-owned commercial channel (Shades of SBS!), Channel 4.
It last week revealed a $A110 million cost cutting program, with 150 jobs going. That’s an estimated 15% of its workforce.
Channel 4 has been hit by a 5% drop in ad revenues (which ITV is also feeling) which has cut its huge (by Australian standards) annual revenues of $A2.2 billion.
The broadcaster will maintain spending on its high profile news and current affairs programs, but will cut spending on dramas, sitcoms and the like, and repeat more programs already broadcast.
Channel 4 reckons it will need over $A300 million in public funding by 2012 to avoid a loss: it wants some of the licence fees paid to the BBC, which is engaged in a high profile and controversial series of cost and employee cuts as well.