Tuesday, 2 October 2007

BSkyB to sell its ITV shares

It has been confirmed by the Competition watchdogs that BSkyB's ownership of a 17.9% stake in broadcaster ITV restricts competition and "operates against the public interest". The group now faces the prospect of having to sell down its stake, which it acquired for £940 million last November.

BSkyB’s move in buying ITV shares caused controversy by Virgin Media's ITV merger plans, and sparked fire with Virgin boss Sir Richard Branson. The final decision on what action should be taken will be made by Business, Enterprise and Regulatory Reform Secretary John Hutton. BSkyB's last annual report placed a carrying value of £795 million on the ITV holding.

Commission chairman Peter Freeman said: "The acquisition has made BSkyB ITV's largest shareholder by some margin and, whilst our provisional view is that this would not necessarily affect day-to-day operations, BSkyB would be able to influence ITV's key strategic decisions, particularly relating to investment, whether in content, capacity or new technology. As a pay-TV operator, BSkyB faces competition from the free-to-air TV offer, of which ITV is an important part. BSkyB would therefore have both the ability and incentive to take advantage of opportunities to weaken ITV or prevent it from taking actions that would threaten BSkyB's interests."

BSkyB is 39% owned by Rupert Murdoch's News Corporation. (source: Yahoo News)

Yesterday, Ebay the famous internet auction site, admitted that it had overpaid hugely for Skype, the internet telephone company. It also said that Niklas Zennstrom, Skype’s founder, would step down as Skype’s chief executive to become non-executive chairman. He has resigned from the role before his permanent successor has been hired. The online auctioneer has cut bonuses due to Mr Zennstrom and others by 60% because it was so disappointed by the Skype’s performance.

EBay bought Skype in 2005 for $2.6 billion. Yesterday it warned shareholders that it would have to take an impairment charge of $900 million (£450 million) because it had valued the group too highly two years ago. At the time of the deal, eBay said it would pay a maximum earn-out bonus of $1.7 billion based on various performance targets. Yesterday, it said that it would pay just $530 million in cash to the Skype founders in the only and last payment of its kind.

An eBay spokesman said: “Skype has not performed as well as we would have hoped. And we are disappointed about the impairment charge. But we still believe Skype to be an extremely valuable asset.” Skype allows users to talk to each other online, through their computer, as if they were on the telephone. While calls between Skype users are free, the company makes money by charging for calls made from Skype to ordinary landlines and mobile phones. (source: Timesonline)

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