Protecting The Turf: BSkyB Buys 17.9 Percent Stake in ITV; No Takeover Bid, It Says

Updated below: After all, it is a small matter of UK TV landscape being redrawn: British Sky Broadcasting Group, run by James Murdoch, has acquired a 17.9 percent stake in UK broadcaster ITV, which has been the target of bids by pay TV rival NTL and others over the last few days. But BSkyB does not intend to mount a takeover bid for the rival broadcaster….it said it had no intention of building more than a 20 percent stake in ITV — a threshold that would legally oblige it to publish a formal takeover bid.
It paid 940 million pounds ($1.78 billion) for 696 million shares, and did this without notifying ITV board, but said it would support the board’s decision in any deal talks.
Analysts were caught off-guard by the big-spending gambit of BSkyB, which is 38 percent owned by Rupert Murdoch’s News Corp. They said it looked like a defensive move to prevent ITV from falling into the hands of a more dangerous competitor, the story says.
WSJ: It declined to identify from whom it bought the shares, but suspicions rose that ITV’s biggest shareholder, fund manager Fidelity Investments, had sold out of its 14% holding.
Telegraph: It’s a cute power play which means no one can do anything material with ITV without BSkyB being satisfied. Murdoch can now explore the full potential of commercial tie-ups between the two broadcasters without distraction. As others dithered, Murdoch acted. It also buys Sir Peter Burt, the ITV chairman, time to find a CEO who can work with BSkyB as his main shareholder and make sense of the new media landscape.
Telegraph II: NTL is set to launch an appeal to competition authorities to try to force BSkyB to divest this stake, the story says, citing sources close to NTL.
Updated: On Sunday, Richard Branson, founder of Virgin Group (and largest shareholder in NTL) branded BSkyB move as “reckless and cynical”, saying it breached several competition laws and urging British politicians and regulators to challenge the move. Branson said BSkyB had breached the 2002 Enterprise Act, which is designed to prevent any shareholder with more than 15% of a company’s equity, having “material influence” over the commercial operations of another company. “This move is seriously damaging to the interests of viewers, program makers, artists and shareholders and the time has come for regulators, politicians and consumers to finally show that they’re willing to stand up to reckless and cynical attempts to stifle competition and secure creeping control of the British media.”

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