BSkyB faces Ofcom probe over ITV stake

British Sky Broadcasting is facing an Ofcom investigation into whether its acquisition of a 17.9 per cent stake in ITV raises public interest concerns, in an unexpected setback for James Murdoch’s satellite broadcaster.

Alastair Darling, secretary of state for trade and industry, emphasised “that this decision only means there will be an initial investigation by Ofcom and is without prejudice to any decisions I take subsequently on whether a fuller investigation by the Competition Commission may be necessary”.

However, Mr Darling’s move will be greeted with delight by Virgin Media, the cable company whose largest shareholder, Sir Richard Branson, had lobbied hard for an investigation into whether the investment in ITV by an associate of Rupert Murdoch’s News Corp threatened media plurality in the UK.

Ofcom must advise Mr Darling by April 27 on whether the case “raises public interest concerns about the number of different owners of media enterprises.”

Mr Darling’s decision followed a provisional finding by the Office of Fair Trading on 12 January 2007 that a “relevant merger situation” may have been created for the purposes of the Enterprise Act 2002 as a result of BSkyB acquiring “material influence” over ITV.

The ruling came as BSkyB warned on Monday over a separate dispute with Virgin Media, relating to the fees Virgin Media pays to carry channels such as Sky One on its cable service.

BSkyB said that a failure to renew the contract could cost it £15m-£20m between now and its June year end, implying a potential annualised impact on operating profits of £45m-£60m.

Shares in BSkyB were little changed in afternoon London trading, slipping 1p to 563½p. ITV shares were flat at 114½p.