Sir Richard Branson is expected to complain to competition authorities about the acquisition by satellite television operator BSkyB of a strategic stake in ITV, calling it “a blatant attempt to distort competition even further by blocking any attempt to create a strong and meaningful competitor”.
The billionaire businessman, whose Virgin group is the leading shareholder in cable television provider NTL with an 11% holding, had been seen as a prime mover behind plans to acquire ITV, the leading commercial television channel in the United Kingdom, which may have been obstructed by the intervention of the satellite television operator.
In a statement he said: “BSkyB has been dismissive about the logic of NTL merging with ITV, whilst at the same time they have spent £1 billion buying up shares to thwart just such a move. BSkyB knows an NTL-ITV merger would enable the two companies together to compete on a more level playing field with their own business.”
“Any merger of ITV’s content with a distribution platform such as NTL’s, would reinvigorate ITV as the leading commercial broadcaster in the UK and give it the strength to compete for premium programming and make the investment in quality programming, necessary to win back its audiences. BSkyB’s move is a blatant attempt to distort competition even further by blocking any attempt to create a strong and meaningful competitor.”
Sir Richard Branson argues that the acquisition by Sky of a 17.9% stake in ITV is a breach of the general merger provision of the Enterprise Act, which is designed to prevent a shareholder with more than 15% having material influence over the commercial decisions of another enterprise.
BSkyB responded by saying that it does not intend to take a seat on the ITV board and that “Sky’s investment in ITV does not enable it to exercise material influence over ITV’s policy and operations and hence is not a merger under UK merger rules.”
“Sir Richard seems to believe that he and his partners in NTL-Telewest have a unique right to acquire ITV,” Sky said in statement.
“We realise that ITV has been going through tough times but with careful stewardship it can return to form,” James Murdoch, the chief executive of BSkyB, had told analysts.
However, the bold intervention has all the hallmarks of his father, Rupert Murdoch, who chairs the company.
Sir Richard argued that “the time has come for regulators, politicians and consumers to finally show that they’re willing to stand up to reckless and cynical attempts to stifle competition and secure creeping control of the British media”.
Cable company NTL, which is listed in the United States, had been hoping to merge with ITV to compete with Sky under the Virgin Brand.