大象传媒

Protecting free TV

• Robert Peston
• 2 Oct 07, 09:00 AM

Competition policy is to be used to ensure that free-to-air broadcasting should not be allowed to wither and die.

That is the kernel of the provisional ruling that acquisition of a 17.9 per cent stake in would result in a substantial lessening in competition and operates against the public interest.

The Commission has effectively taken BSkyB as a proxy for pay television and ITV as the proxy for free-to-air services.

It believes that BSkyB has an incentive to prevent ITV making the kind of substantial investments that would allow free-to-air to thrive as we move towards and through 鈥渄igital switchover鈥� (when the traditional analogue broadcast system is turned off for good).

The Commission has also concluded that 叠厂办测叠鈥檚 17.9 per cent holding gives it the means to frustrate such investments by ITV.

It charges, for example, that BSkyB might use its voting rights at ITV to

a) Reduce ITV鈥檚 investment in new programmes

b) Limit ITV鈥檚 ability to bid for spectrum that would allow ITV to provide high-definition television in competition with Sky鈥檚 current monopoly of HDTV

c) Frustrate takeovers by ITV that would increase its competitive strength.

The Commission adds that BSkyB would somehow be able to mess up attempts by ITV and the 大象传媒 to launch a free satellite service as a result of its 鈥渋ndirect influence due to its industry knowledge and standing鈥� (this latter charge by the Commission is very odd).

What does it all mean?

Well BSkyB will not be able to use all - or perhaps any - of the votes attached to its 17.9 per cent stake. That could mean that it is forced to sell all or some of its stake 鈥� which would be painful for BSkyB, since it paid 135p a share compared with the current ITV price of 104p. The book loss on the holding right now is over 拢200m.

Or BSkyB could be forced to give formal undertakings that it won鈥檛 use the voting rights attached to its shares, thereby forcing it to be a passive investor. That might not be wholly satisfactory to ITV, since the stake would effectively become dead money, in the sense that BSkyB could not be relied upon to provide precious new capital in a rights issue (if such were needed).

So it鈥檚 quite big stuff from the Commission. It鈥檚 a slap to BSkyB just in case it ever harboured the thought that it could thrive by deliberately sabotaging free-to-air TV.

Oh, and for other companies in whatever industry, there appears to be a new rule that a stake of 17.9 per cent in a rival gives almost as much control as owning the whole thing 鈥� which is the equivalent in the takeover game of writing a new offside rule.

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