SKY reduces stake in ITV by 10% at 48.5p putting potential floor on price

Last night, BSkyB announced that it would not fight a court ruling ordering it to reduce its stake in ITV, from 17.9 per cent to below 7.5 per cent.for apparently being anti-competitive. The stake was bought to block a takever of ITV by Virgin Media in 2006, a decision much criticised and ultimately referred to the Competition Commission in 2007 by the government. Morgan Stanley sold approximately 10.4 per cent of its stake, or 404 million shares at 48.5p, raising about £196 million. ITV closed last night at 51.3p, down 2.3%. Sky bought a 17.9 per cent stake for £940 million in 2006, writing down the value by £801 million to 20p a share over the past two years.


The book building exercise by Morgan Stanley should reduce the uncertainty hanging over the ITV share price and may ultimately open the door for a future predator. At 51.p, ITV is now down over 10% from my buy point and may be under further pressure today with 10% stake sale being sold for 48.5p. However, downward momentum should now be stemmed. Today's share price action will be interesting and for those not invested in ITV may be a good time to wade into the company.