British Sky Broadcasting (BSkyB) is facing a regulatory investigation into whether its acquisition of a 17.9 per cent stake in the rival ITV network raises public interest concerns, in an unexpected setback for James Murdoch's satellite broadcaster.
Alastair Darling, UK secretary of state for trade and industry, emphasised: "This decision only means there will be an initial investigation by [the media regulator] Ofcom and is without prejudice to any decisions I take subsequently on whether a fuller investigation by the Competition Commission may be necessary."
The investigation will be the first time the public interest test has been used to examine whether a deal has damaged plurality of ownership of British media.
The Office of Fair Trading is also examining whether the purchase raised competition issues.
BSkyB said in a statement it would "continue to engage fully" with the government and regulatory authorities. ITV, the UK's biggest commercial broadcaster, also said it was co-operating with all the regulatory reviews.
But Mr Darling's move will be greeted with delight by Virgin Media, the cable company whose largest shareholder, Sir Richard Branson, had lobbied for an investigation into whether the investment in ITV by an associate of Rupert Murdoch's News Corp threatened media plurality in the UK. Ofcom must advise Mr Darling by April 27th on whether the case "raises public interest concerns".
Virgin Media welcomed the announcement. "Both policy makers and the public have good reason to be concerned about BSkyB's acquisition of material influence over one of its principal competitors and the resulting concentration of media ownership in the UK," Virgin Media chief executive Steve Burch said in a statement.
BSkyB has said it wants to be a long-term investor in ITV and does not intend to have material influence.
Mr Darling's decision followed a provisional finding by the Office of Fair Trading on January 12th last that a "relevant merger situation" might have been created for the purposes of the Enterprise Act 2002 as a result of BSkyB's acquiring "material influence" over ITV. BSkyB, which is 39 per cent owned by News Corp, bought its stake in ITV in November, in effect blocking its then rival NTL in its own plans to buy the broadcaster.
NTL, since relaunched as Virgin Media, has repeatedly complained that BSkyB's move was anti-competitive.
Becket McGrath, competition law partner at Berwin Leighton Paisner, said he thought Mr Darling had triggered the review because of "the combined pressure from ITV's thwarted suitor and from a certain section of MPs who can be relied on to react noisily to anything associated with Rupert Murdoch".
- (Financial Times service/Reuters)
