The Government has today accepted formal commitments from Sky that it will divest a sizable chunk of its 17.9% shareholding in ITV.
Sky first announced it had acquired shares in ITV at the tail end of 2006. In the spring of 2007, however, the Secretary of State for Trade and Industry called in the Office of Fair Trading (OFT) and Ofcom to investigate.
In the middle of 2007, having considered reports from the OFT and Ofcom, the Secretary of State referred the case to the Competition Commission. The Competition Commission in turn published its own investigation report in December 2007.
In early 2008, the Secretary of State for Business and Enterprise announced he'd made an 'adverse public interest finding' and that he intended to adopt the remedies recommended by the Competition Commission. These included compulsory partial divestiture of Sky's shares in ITV to a level below 7.5%. Sky lodged an appeal, however, with the Competition Appeal Tribunal.
An oral hearing took place in June 2008. The tribunal ruled against Sky in the autumn of 2008.
The company then submitted an appeal application to the Court of Appeal. The Court accepted Sky's application and an oral hearing took place in the autumn of 2009. The Court delivered its verdict last month and denied the appeal.
Consequently, the Department for Business, Innovation & Skills published 'Final Undertakings' requiring Sky to sell the shares to any person or entity unconnected to Sky.
The news was greeted with some scepticism by Steve Busfield of The Guardian:
"Three years and four rulings later Sky has finally agreed to what everybody has known all along: that it should not be allowed to own a debilitatingly large stake in its biggest UK commercial TV rival.
"As it was so long ago, it is pertinent to remember that the deal happened in the first place because ... ITV and Britain's biggest cable operator (NTL, now part of Virgin Media) had been discussing a merger. If the biggest commercial terrestrial broadcaster and the cable operator had got together, Sky might have found itself with a rival it couldn't batter into submission.
"[Sky] swooped, bought 17.9% of ITV and killed the NTL deal. The Competition Commission, the business secretary, the Competition Appeal Tribunal and the court of appeal all said Sky must reduce its stake to below 7.5%, but Sky appealed and obfuscated.
Meanwhile, NTL became Virgin Media but did not become a Sky-threatening giant. ITV stumbled along, lacking investment and clout, watching its share price slide ever further down and the digital future drift ever further away.
So, Sky will lose a few hundred million on the deal in cash terms. But that was never the point. The point was to ensure Sky's continuing dominance of the pay-TV market."