BSkyB ordered to cut ITV stake to below 7.5 percent

By Kate Holton

LONDON (Reuters) - Britain has ordered BSkyB to cut its stake in rival broadcaster ITV by more than half, in a ruling which would cost the country's dominant pay-TV firm about 250 million pounds ($496 million) at current prices.

The government ruling is its final decision on the controversial purchase, which pitted the Murdoch family against Britain's most famous entrepreneur, Richard Branson, and drew condemnation from rivals and legislators alike.

The Secretary of State for Business and Enterprise John Hutton said BSkyB should reduce its 17.9 percent stake to below 7.5 percent because the purchase was anti-competitive.

He also ordered BSkyB not to sell the shares to an "associated person", nor to seek representation on the board of ITV and said it could not reacquire its shares.

But Hutton said he would not disclose the time period given to BSkyB for the sale, following a request from the company. Sky has four weeks to decide if it wants to appeal to the Competition Appeal Tribunal. Any appeal could take months.

"ITV warmly welcomes the Secretary of State's decision," said the broadcaster. "We believe this decision is in the best interests of the overwhelming majority of our shareholders."

The ruling could cost BSkyB around 250 million pounds if it sold at the ITV share price on Tuesday morning, since the value of the shares has dropped since the purchase.

Shares in ITV were initially up 3 percent before easing to trade 1.8 percent higher at 73.3 pence at 1000 GMT. Shares in BSkyB were up 1 percent at 536.5 pence.