Sky loses court appeal to keep its stake in ITV

The court upheld a ruling by the Competition Commission that Sky's shareholding was anti-competitive and it must reduce the stake to below 7.5 per cent.

While the court's decision was expected, the fall-out could be dramatic for any potential buyers eyeing ITV.

Sky's lawyers have repeatedly challenged the regulators over this issue and the company has few options left, although a final appeal to the Supreme Court is possible within 28 days.

Sky said today: "We will review the judgement and order carefully and consider next steps in due course."

The satellite TV broadcaster, which spent £946 million buying ITV shares for 135p each in November 2006, is sitting on a loss of £550 million on the total shareholding.

But it could be in Sky's interests to prolong the appeal process further.

"If they had thrown in the towel a year ago, they would have had to sell the ITV stock at 20p and now it's up to 60p," said one City source.

"To continue the appeal for a few more months gives Sky more scope for ITV's share price to recover further."

Sky, 39 per cent owned by Rupert Murdoch's News Corporation, always maintained that it bought its ITV shares as a long-term investment.

But regulators - and most of the rest of the media industry - believed BSkyB boss James Murdoch bought the stake to block rivals from buying ITV.

The Competition Commission called today's ruling "the right conclusion".

Virgin, which tried to merge with ITV just before Sky bought the shares, said: "We hope Sky now reduces its stake in ITV without further delay."

If Sky accepts the judgment, it is thought that the pay-TV company would have an undisclosed deadline of around six months to sell its shareholding down to 7.5 per cent but could be tempted to get rid of the whole 17.9 per cent stake.

RTL, owner of Channel Five, and Mediaset, part of Italian prime minister Silvio Berlusconi's media empire, have both been mooted as buyers of ITV.

While Sky will be unhappy to sell the ITV shares at a loss, it has already written off the investment in its accounts. Sky took a £616 million hit in 2008 and a further £191 million last year.

Sky's shares were unmoved at 564p while ITV shares rose 0.15p to 58p.