Britain's Competition Commission has recommended that pay-TV firm Bskyb reduce its 17.9 per cent stake in broadcaster ITV to below 7.5 per cent because it is anti-competitive.
The commission's report, published today, has been sent to Secretary of State for Business and Enterprise John Hutton, and he has until January 29th to announce a final decision.
Bskyb, Britain's dominant pay-TV firm, spent £940 million on its stake in ITV last November in a move that effectively blocked cable group NTL - since relaunched as Virgin Media - from buying ITV.
The moved caused uproar, with rivals and legislators alike condemning the deal.
The price, for what Bskyb called a long-term investment, was at a 17 per cent premium at the time of the deal, but ITV's shares have traded even lower since, closing yesterday at 83 pence.
Bskyb had offered to give up some voting rights, but the commission said this would not be effective.
ITV has said Bskyb should sell the entire stake or at least trim it to 4.9 per cent as it could otherwise exert influence when voting in special resolutions.
The commission said said that of two possible options - either a full divestiture or a reduction to less than 7.5 per cent. It is thought the latter would be sufficient to prevent Bskybfrom having any material influence over ITV's strategy.
It also said Bskyb should not seek or accept representation on ITV's board.