Yesterday, the OFT said that it did not believe that there was enough information to "suggest that a merger situation has arisen at this stage". However, the authority's announcement does not mark a final decision and the body may readdress the topic in the near future.
Its decision comes as a blow to NTL and its hopes of a £5bn merger with ITV. Shares in ITV fell yesterday as analysts predicted the chance of a merger had now receded. Investec said it saw ITV's future as being an independent one and Fitch said BSkyB's move had quelled merger speculation and would allow ITV's management to focus on running the business.
It has also been revealed that Sky had to increase its offer to buy the ITV stake by 5%, because investors in ITV were reluctant to sell stock. It had to raise its offer price to institutional investors from which it bought its stake from 128p a share to 135p.
Broadcasting regulator Ofcom met yesterday to discuss whether the £940m investment breached change of control restrictions. It will examine whether a change of control has taken place at ITV. However, the process, which could lead to a more rigorous investigation, is likely to remain unresolved for weeks.
Steven Burch, NTL's chief executive, described Sky's move as "anti-competitive" and accused the satellite broadcaster of exerting "material influence on ITV and Freeview" and wanting to have an "unreasonable and unfair grip on media in this country".
Burch's comments come after Sir Richard Branson, a 10.5% shareholder in NTL, attacked Sky for the same reasons.
Sky's move does not completely block NTL's merger plans, but it will make them more difficult and more expensive. NTL had planned a 130p bid, valuing ITV at around £5bn. It could now be forced to pay £5.3bn -- what Sky's acquisition of 17.9% at 135p values the company at.
NTL could still buy 80% of ITV, but Sky will get a say in any final deal and it will get a look into its rival's business.
Sky is concerned that a tie-up between NTL and ITV would provide a powerful challenger to its dominant multi-channel position. Under the 2003 Communications Act, Sky is allowed no more than a 19.9% stake in ITV.
Aside from NTL, critics of Sky's acquisition of the stake in ITV include the Liberal Democrats. Don Foster MP, the party's culture spokesman, asserted that quality broadcasting is best maintained by vigorous competition and that, although competition rules appear not to have been broken, the spirit of them had been.
Speaking to City analysts on Friday, James Murdoch, the chief executive of BSkyB, said that his company intended to be a "supportive shareholder" in ITV, but that BSkyB wanted to "explore options to create value in the interests of both BSkyB's and ITV's shareholders", suggesting possible future collaboration between the two broadcasting giants.
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