BSkyB Sells The Bulk Of Its ITV Shares

Philip Stone February 9, 2010 (Follow on Twitter)

UK satellite broadcaster BSkyB has given up most of its stake in terrestrial television broadcaster ITV.

“Sky will not pursue a further appeal in relation to its investment in ITV plc,” said the BSkyB statement (February 8). “We have entered into undertakings with BIS and we can confirm that Morgan Stanley is acting as sole book runner on the placement of approximately 10.4% of ITV.” The placement went quickly after News International, parent of BSkyB, found no strategic investor interested in its entire ITV stake.

Back in November, 2006, when James Murdoch ran BSkyB -- he now runs the Murdoch empire in Europe and Asia -- he had the bright idea of spending £940 million to buy a 17.9% stake in commercial broadcaster ITV, that basically stopped in its tracks an expected ITV takeover bid from NTL (later renamed Virgin Media). Richard Branson did not take kindly to Sky’s move, shouting to anyone who would listen that the purchase was anti-competitive and for whatever reasons Sky bought the shares it did have the result of stopping a strong cable business competitor and foe taking over the UK’s leading terrestrial broadcaster.

To make a long story short last month Sky lost a Court of Appeal decision after the UK Competition Commission said the ITV stake must be reduced to no more than 7.5% and it has now done the deed. The last legal appeal, the fourth, would be the last.

Murdoch spent 135 pence a share; the 10.4% holding sold Monday at 0.485 pence each for a total £196 million. ITV shares closed at 0.513 pence each Monday so the remaining shares have a value today of around £140 million. That means the value of the original investment has thus far dropped to about £336 million  -- or in other words Murdoch & Co. are down some £600 million.

Worth the £600 million to have stopped that Virgin-ITV merger? Only the bean counters who did the math on the damage a Virgin-ITV merger might have brought upon Sky will know the answer for sure. Sky says it plans on keeping its remaining 7.5% stake, at least for the medium term (in other words it’s waiting for the share price to go up).

Michael Hedges contributed to this article.

See also in ftm Knowledge

Rupert Murdoch and News Corporation

News Corporation has a global footprint. Rupert Murdoch has a global fingerprint and when he talks everybody hears it. Update includes News Corporation and News International resturcturing, European television and newspapers. 108 pages PDF (April 2009)

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