Broadcasting giant BSkyB has lost its challenge at the Court of Appeal over the Government’s decision to force it to reduce its 17.9% stake in ITV.Sky began its legal challenge after a Competition Commission finding that the group’s shareholding gave it influence over ITV’s strategy in a way that restricted the market. The Government ordered the media group to ditch more than half the holding – down to below 7.5%.
A challenge at the Competition Appeal Tribunal was unsuccessful and three appeal judges ruled that the direction to reduce the shareholding must stand. Lord Justice Lloyd, giving the ruling of the court, refused permission to take the case to the Supreme Court but Sky can apply directly for a hearing.
The judge said the appeals by Sky and Virgin Media arose from the acquisition by Sky in 2006 of 696 million shares in ITV. A spokesman for Sky said after the hearing: “BSkyB notes the decision by the Court of Appeal in relation to BSkyB’s shareholding in ITV. We will review the judgment and order carefully and consider next steps in due course.”
Shortly before the share deal, Virgin had announced an offer worth about 122p a share whereas the Sky acquisition was at 135p a share, 17% above the share price of the day. The Government referred Sky’s deal to the Competition Commission, which found that the acquisition had created a merger situation and this was expected to result in a substantial lessening of competition which could operate against the public interest.
Sky won its appeal over the number of people controlling media outlets serving UK audiences, with the appeal judges reinstating the Commission’s conclusions that the acquisition would not operate against the public interest on this issue.