Virgin demand on a full Sky stake sale

Somewhat unsurprisingly, Virgin Media have called on the Competition Commission to force Sky to cough up the entirety of their 17.9% stake in ITV.

Earlier this month, the Competition Commission deemed that it had found the stake detrimental to the interests of the public and created a ‘significant lessening of competition’ in the market. Options that the Commission will be considering involve forcing a complete sale of the stake, or a reduction to just under 15%.

The Commission begins its formal investigation today, but no action will be taken until January next year. ITV share prices have fallen – partially due to these developments, and the recent phone call scandals – if Sky were forced to sell up tomorrow, they would lose millions. Sky have stated that if they are forced into a loss-making sale come January, then they will seek legal action if some form of compensation is not made.

Many have speculated that if the market climate after the New Year is not favourable to Sky, then a partial sale, reducing the stake to under 10% will instead be enforced. Bitter rivals Virgin have made it clear that anything less than a complete sale is unacceptable and that Sky’s interests in ITV are not primarily financial, and that even with 10%, Sky could prove to be disruptive.

The genesis of the Sky/Virgin beef can be traced back to the NTL:Telewest bid for shares in ITV and the subsequent Murdoch midnight share raid last year.

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