Sky agrees to cut stake in struggling ITV

By SIMON DUKE FOR MAILONLINE
Updated: 17:34 EST, 8 February 2010

One of the longest running sagas in the UK television industry is set to end today after BSkyB gave up its fight to retain all of its controversial stake in ITV.

After two years of legal wrangling, Sky has decided to comply with a competition watchdog order to slash its 17.5 per cent holding in the broadcaster to below 7.5 per cent.

The climbdown is expected to heighten speculation that ITV could become a target for a foreign media group looking to break into Britain's TV market.

Under pressure: BSkyB has finally given up the fight and will comply with a competition watchdog order to reduce its 17.5 per cent holding to 7.5 per cent

ITV (down 1.2p to 51.3p) has been hard hit from the unprecedented slump in the TV advertising market, but analysts believe a recent pick-up in spending could flush out potential bidders.

Britain's biggest pay-TV group has hired Morgan Stanley to off-load around 405m ITV shares into the market. The placing is expected to close today.

The Wall Street giant is understood to have offered shares to major investors at between 48.5p and 49.5p each - a discount to last night's 51.3p closing price.

The sale will crystallise a loss of more than £320million for Sky, which picked up its 17.9 per cent stake in ITV in late 2006 at a price of 135p per share.

The £940million swoop blocked cable group NTL, which has since re-branded as Virgin Media, from launching a planned bid for ITV.

The Competition Commission originally ordered Sky to slash its holding in 2008.

Since then Sky (unchanged at 524.5p) has vigorously resisted the ruling through a series of challenges, culminating in an unsuccessful attempt to overturn the decision in the Court of Appeal ten days ago.