The Office of Fair Trading (OFT) has confirmed that it has started a formal investigation into BSkyB's £940m purchase of a 17.9% stake in ITV. A substantial lessening of competiton in the TV market could harm quality and increase prices for consumers.
The problem with BSKYB's takeover of ITV is that they would be ablo to influence ITV's key strategic decisions, particularly relating to investment, whether in content capacity or new technology.
BskyB said they bought the shares because they were cheap, and they saw the opportunity as simply an investment.
However, Richard Branson, NTL's biggest shareholder, described the purchase as a 'blatant attempt to distort competition'. It appears Branson was only saying this as he was interested in a full takeover of ITV himself.
BSKYB have argued back saying according to legislation, the threshold is a 20% stake and because its stake was only 17.9%, it was entitled to invest. BskyB have confirmed their wish to be a supportive shareholder, working constructively with ITV, and exploring options to create value for all shareholders.
The regulators said that BSKYB should either sell all of its shares or cut its stake to below 7.5% and promise to not to take a seat on ITV's board. If this was to happen, BSKYB would lose £150 million and it will trigger a large fall in ITV's share prices. This would appear bad for everyone concerned. Reports suggest that if it hadn't been BSKYB who bought a large stake in ITV, then it would have been someone else, even Branson's NTL.
For further reading check out this cool link
No comments:
Post a Comment