Broadcasting giant BSkyB yesterday lost its appeal against the government's decision to force it to reduce its controversial 17.9% stake in ITV.
Sky lodged a legal challenge in February against a Competition Commission finding that the group's ITV shareholding gave it influence over ITV's strategy in a way that restricted the market. That ruling was accepted by Business Secretary John Hutton, who ordered the group to ditch more than half the holding - down to below 7.5%.
Sky has taken a substantial hit on the value of its ITV shareholding, which has plummeted in value since being bought for £940m.
Yesterday's decision by the Competition Appeal Tribunal is the latest twist in a long-running saga for ITV. It had been in the sights of the then cable firm NTL - now Virgin Media - until Sky's stake purchase in November 2006 scuppered hopes of a tie-up.
The tribunal said yesterday it had "dismissed" Sky's appeal application.
Virgin Media had also appealed to the tribunal, demanding that Sky be made to sell the entire stake. The court accepted parts of Virgin Media's argument, but added it would wait for reactions from involved parties before deciding whether it needed to be addressed further.
Sky said it would now "review the judgment carefully and decide on next steps in due course".
ITV cheered news of the decision and said it was also waiting for the next stage in the process.
However, reports suggest Sky was considering a further appeal against the decision, as the group has the right to take its case to the Court of Appeal and possibly from there to the House of Lords.
Sky said on lodging its appeal earlier this year that the Competition Commission had built its case on "implausible hypotheses".
The Commission deemed that the stake purchase had caused a merger to take place and that its holding prevented ITV from pursuing an independent strategy.
Sky also argued that the decision to force a sale to below 7.5% was "unreasonable and disproportionate".
Sky posted its first loss for six years in February after taking a hefty write-down on the ITV stake.
The group said in July the charge from the stake had risen to £616m, almost double the initial £343m estimated after ITV's share price tumbled further. The holding is now worth less than a third of the original amount paid, with ITV shares hitting all-time lows amid an advertising downturn. BSkyB bought the stake in 2006 for 135p a share, or £940m, in a deal which effectively blocked NTL from buying ITV.
With ITV's shares closing at 41p yesterday, the stake is now worth less than £300m.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article