Inch by inch...: BSkyB offer voting remedy on ITV merger
It has been reported over the weekend that BSkyB has offered to forego the full voting rights attendant on the 17.9% share in ITV that it has acquired (1). The Competition Commission has previously suggested that some remedy must be found to offset the impact on competition that it has perceived. The proposal was contained in a letter dated 12 October. A remedies hearing was scheduled to take place last week.
BSkyB is keen to ensure that there is no presumption in favour of any of the possible remedies mooted in the provisional report. It is proposing to dispose of such measure of voting rights that is currently deemed to facilitate its influence by placing them in a voting trust with a respected institutional trustee. The company calculates that on the Commission's figures this could be achieved by alienating as little as 2.3% of the shares, and has generously proposed to nominate 3% (leaving 14.9% under its control, which it considers to be clearly insufficient to allow material influence). This is attractive because, as a structural solution, it would require no monitoring by the OFT.
Clearly, this simple voting remedy is designed specifically to remove the only basis for a finding of material influence, viz by dint of the purported ability to block special shareholders' resolutions (which requires 25% of voting shares). It is a clever, and difficult to gainsay, strategy. The company has realised that on the Commission's own figures even a relatively small reduction in its voting power would allow the ITV board to proceed irrespective of BSkyB opposition. Minded of the Commission's obligation to act proportionately, it is offering a quick fix. To my mind, the Commission would have to rejigg its complaint if it is to reject such a proposal. It will be interesting to see the response.
Predictably, not everyone agrees: Virgin Media are still advocating (baldly) a complete sell-off.
In addition to its proposal which is without prejudice, BSkyB has also promised further evidence to contest the Commission's preliminary findings both that a relevant merger situation has been created, and that such a situation will lead to competition problems on the all-TV market.
A non-confidential version of BSkyB's letter, along with the responses received by the Commission from other interested parties, are available on the inquiry webpage.
3 comments:
Greenslade has noted that some in the US are urging the FCC to intervene in the News Corporation purchase of the Wall Street Journal (Dow Jones). Such calls might be seen as part of a general policy of stop media concentration in whatever way feasible (stop Murdoch?), but - absent any significant antitrust concerns - there doesn't look to be much mileage here.
Last week, Michael Grade attempted to raise the ante over Sky's holding by stating that it was clearly acquired in the hope of influencing the future development of the company. He wants Sky to be forced to dispose of its entire holding on account of the material influence that it achieves. This contention would be knocked out of the water if the CC accepts Sky's remedy proposal.
Also reported last week was James Murdoch's rubbishing of the suggestion that Sky may seek to swap its stake in ITV for that held in Channel 5 by RTL should the Commission rule against it in the nerger case.
The FT website also recently carried a lengthy interview with James Murdoch, which can be watched or read as desired.
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