DBERR — the BSkyB / ITV decision …
UPDATE:Â I should add — I am now a News Corp (Class A) shareholder … as of 25 Jan 08, although not in significant amounts (sadly)…
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Folks, by now everyone has seen the outcome of the government’s review of BSkyB’s 17.9 percent stake in ITV. The full details can be found on the DBERR website: here. The upshot: BSkyB is told to divest down to below 7.5 percent.
I thought the most interesting aspect of DBERR’s decision was its endorsement of the logic of the Competition Commission with respect to the nature and scope of the competition law remedy:
‘The Competition Commission recognised the potential for these remedies to reduce the scope for BSkyB to influence ITV’s strategy although it also noted the risks inherent in a long term remedy that places complete reliance on the independence of a third party and the need for continued monitoring of actual performance and of the contract between BSkyB and the voting trust. (emphasis added)’
But wasn’t contract-based separation (with 230 undertakings) and long-term monitoring the government’s preferred remedy in the BT Settlement? How is that consistent?
Surely that is the weakest part of the government’s decision and one that I imagine a court would ultimately over-turn. I’m guessing a court would find that — if the government intends to intervene on a massive scale and use a somewhat vague public interest justification to block media ownership that is otherwise consistent with the thrust of the 2003 Act — then it needs to tread carefully and use the absolute least intrusive means by which to ensure the public interest. In this case Sky proposed safeguards to address media pluralism concerns and the government appear to have been too quick to dismiss them in this case. But the same government readily accepted similar remedies in the case of BT. (And let’s keep in mind — the public interest harm with Sky was predicted — with BT it was demonstrated).
Onward and upward…
Dear Russ,
After a visit to Ofcom for their Annual Plan review and the good news if not already anticipated on the BSkyB/ITV share issue. I see no reason why Sky would have any legal grounds for an appeal.
Your reference to BT is not a strong link as BT was a established monopoly which had to be regulated and the market had to be opened up. BSkyB was not a state owned monopoly so I simply don’t see how your reference to the way BT was delt with has any relevance with how BSkyB is delt with?
I have some difficulty is accepting that actions by BSkyB which had the affect of reducing competition from NTL now Virgin Cable should not go un punished. BSkyB should stick to improving their consumer offering and stop trying to reduce competition.
My understanding is that BSkyB will have 6 months to sell its stake in ITV. Any loss is the fault of James Murdoch and co as they knew the risks when they chose to to buy the ITV shares at above the market value.
I and Rapture TV have notified the Competition Commission and Department of Business, Enterprise and Regulatory Reform that we will be looking to become a Intervener to support the CC against any BSkyB Appeal.
Rapture has useful information that shows that BSkyB was not completely truthfull in their submissions to the Office of Fair Trading.