Ofcom to scrutinise Sky-ITV deal

[hamba]

Darling steps into Sky-ITV row

The Department for Trade and Industry has taken the unprecedented step of asking Ofcom to examine the public interest ramifications of BSkyB's purchase of a 17.9% stake in ITV.

Issuing a special intervention notice, the DTI has asked Ofcom to conduct an initial investigation by April 27 on whether the acquisition "raises public interest concerns about the number of different owners of media enterprises".

"I am today asking Ofcom to conduct an initial investigation into the public interest issues that may be raised by this transaction and to report back to me," said the trade secretary, Alistair Darling.

"I wish to emphasise that this decision only means there will be an initial investigation by Ofcom and is without prejudice to any decisions I take subsequently on whether a fuller investigation by the competition commission may be necessary."

The DTI said it would also hear on April 27 from the Office of Fair Trading about the competition issues raised by the transaction.

Last month, the OFT reported its provisional view that Sky might have acquired a "material influence" over ITV when it bought its stake back in November.

Ofcom is already investigating whether a change in shareholding at ITV amounts to a change of control and whether that would have an effect on the broadcaster's licensed services such as news and current affairs.

Sky spent nearly £1bn on November 17 buying its stake in ITV, which was then without a chief executive and being courted by cable group NTL.

NTL, now Virgin Media, cried foul over Sky's tactics and has accused it of anti-competitive behaviour.

This is the first time a special intervention notice has been issued by the DTI since the passing of the Enterprise Act five years ago.










Chris Tryhorn
Monday February 26, 2007
MediaGuardian.co.uk
© Guardian News and Media Limited 2007

 

[hamba]

Sky and ITV investigation explained

Sky and ITV investigation explained

Submissions close today in the Office of Fair Trading's investigation into BSkyB's acquisition of a 17.9% stake in ITV.

MediaGuardian.co.uk takes an overview of the story so far - and what happens next.

Q: Why did Sky take a stake in ITV?

A: Back on November 17 when Sky announced the shock £940m purchase, it said the move was designed to support ITV at a time when its share price had been under pressure and it was without a chief executive. However, analysts saw it as a spoiler move to scupper cable group NTL's dream of merging with ITV to create a £9bn rival to Sky.

Q: Could Sky have bought even more shares?

A: Under communications legislation, Sky cannot own more than 20% of ITV. This is to prevent too much cross-media ownership. Sky is 39%-owned by Rupert Murdoch's News Corporation, the parent company of News International, which owns a significant part of the UK national newspaper market including papers such as the Times and the Sun.

Q: What did NTL do in response to Sky's move?

A: The company and its leading shareholder, Sir Richard Branson's Virgin group, immediately cried foul. Sir Richard tore into Sky's "reckless and cynical attempts to stifle competition, and secure creeping control of the British media". NTL concentrated its fire on the allegation that Sky had breached a clause in the 2002 Enterprise Act that forbade shareholders with more than 15% of a company from having "material influence" over commercial decisions. NTL called on the OFT to investigate.

Q: What did Sky say?

A: Sky said that it would not influence ITV, and would seek no representation on the company's board. It defended its record as one of widening competition for consumers.

Q: What did the regulators do?

A: Media watchdog Ofcom jumped straight in, announcing on November 20 an investigation into whether Sky's share purchase represented a "change in control". It is the first such investigation since Ofcom was established in late 2003. To date there has been no indication of what the regulator's view is.

Q: And the Office of Fair Trading?

A: It, too, began investigating. On January 12 it reported its provisional view that Sky might indeed have acquired a "material influence" over ITV. It asked for comments from third parties by today. If it sticks to its provisional finding it could refer the case to the Competition Commission.

Q: What about the Department of Trade and Industry?

A: The DTI has yet to speak out, but an announcement is expected soon from secretary of state Alistair Darling as to whether he will issue an unprecedented "public interest intervention notice". This would require reports from the OFT and Ofcom on the competition and public interest implications of Sky's move, including the question of whether it has affected the plurality and diversity of the British media. After receiving these reports, the minister would decide whether to refer the matter to the Competition Commission. If he chose not to, jurisdiction in the matter would revert to the OFT and it would then decide on whether or not to refer it to the commission.

Q: And then?

A: Stay with us here ... If it is the OFT that makes the referral to the commission, then it is the commission that makes the ultimate decision on whether Sky was at fault. However, if Mr Darling makes the referral himself, he will make the final decision once he gets a report back from the commission.

Q: In summary?

A: It's a complex web of jurisdictions and the matter is unlikely to be resolved any time soon. The future shape of UK broadcasting is at stake, and there are armies of lawyers lined up on either side.

Q: So where does this leave NTL?

A: NTL had to withdraw from its attempted merger with ITV after the board rejected its offer. It cannot resuscitate those plans because Sky paid well above market prices for its stake, and therefore could not be bought out cheaply enough. NTL has to hope its long game will pay off: ultimately it wants to see Sky forced to sell its shares, putting ITV back in play.

Q: And what about ITV?

A: ITV is now under the leadership of new executive chairman Michael Grade, and will be hoping that 2007 will bring a creative renaissance and an advertising recovery. Its ownership is not of pressing concern to executives, although many insiders feel Sky's move, whatever the true motivation behind it, has given ITV greater stability.

Q: Finally, what about shareholders?

A: They just want the share price to go up. Sky's purchase has depressed the shares because there is now no imminent hope of a takeover bid. But the feeling in the City is that recovery under Mr Grade is both possible and the best hope for long-term growth, and therefore investors are relatively sanguine about Sky's position on the ITV share register.








Chris Tryhorn
Thursday January 25, 2007
MediaGuardian.co.uk
© Guardian News and Media Limited 2007

 

[biffo1]

thanks once again Hamba for the good read
regards biffo

 

[zerofool2005]

I hope Sky get seriously pwnd after what they have been doing of late to NTL

 

[Munkey]

Thanks for posting that info.

 

[pinkhelmets]

this story continued........

Official complaint from Virgin, Channel4 and various MP's put pressure on the DTI which resulted in an investigation by ofcom.

The latest.....

ITV themselves have this morning submitted a statement, confirming they do not believe the purchase of a 17.9% stake by Sky is in the best interests of other shareholders. The main concern for ITV is that as a competitor Sky would be able to block resolutions that require a 75% shareholder majority.

A released statement from ITV executive chairman Michael Grade:
"On 17 November 2006, British Sky Broadcasting acquired a 17.9% holding in ITV at a price of 135 pence per share. At the present time, BSkyB's holding is subject to regulatory reviews by Ofcom, the OFT and the DTI in relation to both competition and broader public interest issues; Ofcom is also separately reviewing 'change of control' under the Broadcasting Act. ITV has made submissions in response to the authorities, at their request, and has noted the concern that BSkyB (as a competitor) may be able, with the size of its holding and given historic voting patterns, to block a shareholder resolution requiring a 75% majority and that this may not be in the interest of ITV's shareholders as whole. The authorities will consider whether there should be any form of restriction on BSkyB in respect of their holding in the Company. The Board will continue to act in the interests of all shareholders."


So ITV doesnt agree with the purchase either.

 

[staples]

Well done and thanks for latest developments

 

[joe516]

Colette Bow, Ofcom's consumer panel chairman, has written to Ofcom head Ed Richards to request the regulator helps to find a resolution to the BSkyB and Virgin Media carriage deal dispute.

In a letter to Richards, Bow said customers are finding it difficult to get what they want and are also paying for, and requests Ofcom intervenes.

Earlier this month over three million Virgin Media customers lost access to Sky basic channels, including Sky One, because of the dispute.

The letter said: "The Panel is now concerned that problems for consumers are developing in this market that are not easy for consumers to resolve themselves directly – and which are therefore generating serious consumer detriment."

"We are concerned, therefore, that there are, right at this moment, consumers who are being disadvantaged and who will find it difficult to use the normal mechanisms available in other market places to get what they want – and are paying for."

The consumer panel, which was set up by the regulator to act as an independent voice on behalf of consumers in telecoms disputes, is the second consumer organisation to take an interest in this battle.

The National Consumer Council (NCC) said it was considering bringing a 'supercomplaint' against the two companies.

http://www.digitalspy.co.uk/cable/a43938/ofcom-intervention-urged-in-virgin-dispute.html