BSkyB Buys Stake in ITV for £940 million

LONDON, November 20: In a
surprise move, BSkyB has acquired a 17.9-percent stake in ITV for £940 million,
thus becoming the broadcaster's biggest shareholder, according to Media
Guardian.

BSkyB’s purchase of 696
million shares of ITV at 135p a share appeared to many to be a move to thwart
NTL's reported bid to merge with ITV.

In a statement, BSkyB said
it had no intention of increasing its ITV stake above 19.9 percent, or of
launching a full takeover bid if ITV. Indeed, under the Communications Act
2003, the satellite broadcaster is prohibited from owning more than 20 percent
of ITV.

Following the move, BSkyB
chief executive James Murdoch said in a conference call that his company will
not seek a position on ITV’s board. "Our investment is a long-term and
supportive shareholding in ITV,” he was reported to say. “It reflects our
belief that ITV's decline has been overstated… We realize that ITV has been
going through tough times but with careful stewardship it can return to
form."

BSkyB funded the £940m
purchase from its existing cash reserves as well as its revolving credit
facility. The move was apparently made without any prior knowledge of the ITV
board of directors, but the company said it has communicated to ITV's board its
“intention to be a supportive shareholder.”