BSkyB tumbles as Vivendi considers selling stake

LONDON - Shares in BSkyB tumbled 16.5p this morning as speculation emerged that Vivendi Universal could offload its 23% stake in the satellite broadcaster to institutional investors rather than via an asset swap.

The French media giant has made inquiries to investment bankers about its options for the stake, which is valued at £3bn. A sale to institutional investors could reduce the power of News Corporation chairman Rupert Murdoch at the broadcaster, according to reports.

Vivendi holds one seat on the broadcaster's board and a sale of Vivendi's stake to institutional investors would likely force a series of changes at board level. Murdoch's News Corp, with a 37% holding, is the satellite TV broadcaster's largest shareholder.

Vivendi is said to be considering a contingency plan if it cannot negotiate an asset-swapping deal with BSkyB. Earlier reports suggested that Vivendi might exchange its BSkyB stake for a minority shareholding in USA Networks, which belongs to US cable magnate John Malone.

Some bankers are said to have advised Vivendi that it would get a better price for its stake on the market than from a sale to a strategic investor, which would have to be satisfied with remaining a minority shareholder in BSkyB.

BSkyB shares were trading at 700p at 11.20am -- it had fallen the furthest of the blue-chip stocks in the FTSE 100 this morning, despite reassurances from the French media giant that it had no plans to seek a stock market placing for the holding.

Late last year, Vivendi agreed to give up the stake within two years in return for EU regulatory approval of its $34bn (£24bn) takeover of Seagram, the Canadian group which owned content giants Universal Studios and Universal Music.



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