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Sky sells 10.4% of ITV at $550m loss
Satellite platform BSkyB has sold a 10.4% stake in troubled UK broadcaster ITV for just £196m (US$306.5m), having paid some £546.1m (US$853.8m) for it four years ago.
The deal values the once-mighty ITV at £1.88bn, compared to £5.25bn when BSkyB's then CEO James Murdoch acquired the shares in November 2006.
Investment bank Morgan Stanley offloaded the 10.4% stake to institutional investors late yesterday at between 48.5p and 49.5p, BSkyB having bought its ITV shares at 135p a share four years ago in a move to kill off 122p-a-share merger plans between ITV and cable operator NTL.
The move follows a protracted legal battle with the UK competition authorities that was finally resolved yesterday, when the News Corp-backed satcaster reluctantly accepted the regulatory decision that it must reduce its ITV stake.
However, the pay-TV giant this morning said it intends to retain a 7.5% investment in ITV for the "medium term". Sky paid £940m (US$1.5bn) for a 17.9% stake in ITV in November 2006.
Though on paper the sale looks like a huge loss for BSkyB, the fact is that strategically the company has benefited from weakening two of its biggest rivals. ITV has lost out by not being part of a bigger parent company and Virgin Media, which emerged from NTL, would be much stronger with a free-to-air terrestrial outlet to cross-promote its pay services.
Furthermore, BSkyB's legal delays might have cost it plenty in lawyers' fees but these delays mean that the eventual sale came after ITV's share price crept up from the lows of 2009, when it bottomed out at just 19p.
9 Feb 2010
© C21 Media 2010
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