BskyB shocked the markets, ITV, NTL and Virgin’s Sir Richard Branson when it bought nearly 20% of ITV from its biggest shareholder the Fidelity fund on Friday.
James Murdoch, Sky CEO and architect of the £940m (E1.36bn) raid, said it was a financial investment and they would be supportive long-term shareholders. Branson said it was a cynical attempt to scupper the proposed takeover of ITV by Virgin Media (the renamed NTL where Branson is the biggest shareholder), and extend undue influence over ITV. He says he will try and get the deal undone through the regulators. Ofcom was meeting yesterday in an emergency session, but implied that at this stage there was nothing for it to act upon.
Meanwhile ITV has to remain studiedly neutral; chairman Sir Peter Burt is expected to meet with James Murdoch soon.
If nothing else the deal guarantees a high profile dual between two ‘big beasts’ of the media jungle: Murdoch will want to show he can emulate his father when it comes to defending controversial tactics and Branson will be looking for a repeat of his victory in the drawn out feud with British Airways in the airline business.
It also guarantees a mountain of speculation as to Sky’s motives. Certainly Sky saw the NTL takeover of ITV as a threat and it may have some of the same advantages in mind: driving down the cost of programme supply, cross promoting platforms, coordinating convergence strategies and, most important, joint bids for premium rights freezing out the BBC and Virgin/NTL.
However it is precisely these activities that would run into trouble with the regulators so, for now at least, passive investment will be the order of the day – Murdoch says he believes the woes at leaderless ITV have been exaggerated and he expects a substantial upturn. “BSkyB wishes to explore options to create value in the interests of both BSkyB’s and ITV’s shareholders. BSkyB believes that ITV is one of Europe’s premier broadcasting and production businesses, and holds substantial potential for long-term value creation. BSkyB has no intention of acquiring shares that would result in BSkyB’s stake exceeding 19.9 per cent or making an offer for the whole of ITV’s remaining share capital.”
One further possibility is using the stake as bargaining chip at once blocking the NTL deal but also encouraging in RTL to bid for ITV. RTL, short of cash and therefore reportedly turning to private equity to help finance a bid, might welcome the chance to swap Channel Five for the Sky stake. |
