Sky takes £350m hit on disposal of ITV stake

LONDON - Sky has lost £349.5m on its ITV investment after reducing its 17.9% stake to 7.5%, following a ruling by the Competition Commission.

James Murdoch, former chief executive of Skyt
James Murdoch, former chief executive of Skyt

Just over 404 million shares were placed on the market last night (8 February) by Morgan Stanley, achieving a price of 48.5p per share, totalling £195.9m. More than one bidder is understood to have been involved.

Sky had paid 135p per share, valuing the shares sold yesterday at £545.4m.

Former chief executive James Murdoch bought the 17.9% stake in a surprise move in November 2006, intending to keep Britain's biggest commercial broadcaster away from a merger with pay-TV rival NTL.

Concern about Sky's influence over ITV led to the intervention of the Competition Commission, which ruled in December 2007 that Sky should reduce its stake to 7.5%.

After spending two years appealing against the decision, Sky yesterday gave up on its last possible option of appealing to the Supreme Court and divested 10.4% of the broadcaster.

However, the broadcaster said it intends to retain its remaining 7.5% investment in ITV "for the medium term and to remain a committed shareholder of ITV".

Sky has already recognised the fall in the value of its ITV stake in its accounting, and is therefore expected to book a small profit on the disposal.