Morgan Stanley (NYSE:MS) Sole Book-runner on BSkyB (LON:BSY) Selling Stake in ITV Plc (LON:ITV)

8After several years of battling it out, BSkyB (LON:BSY) decided to toss in the towel and sell 10.4 percent of its stake in ITV Plc (LON:ITV) after Britain’s Court of Appeal time and time again rejected appeals from BSkyB to retain its 17.9 percent stake in ITV. Morgan Stanley (NYSE:MS) was the only book-runner in the deal.

While they could have continued to appeal if they chose to, the Court of Appeal told BSkyB there was little chance of succeeding and little reason to continue on. The 10.4 percent sold by BSkyB came to $305.4 million.

Rules in Britain maintained BSkyB had to have their stake in ITV at least one vote below 7.5 percent, the reason for 10.4 percent being what was sold.

This all started from the events of 2006 where BSkyB bought the 17.9 percent stake in ITV in order to keep NTL, a British cable group which was later re-branded as Virgin Media, which had as its largest shareholder, billionaire Richard Branson, the guy who seems to have his hands in every interesting endeavor out there, including space tourism through Virgin Galactic and his latest venture of working on undersea tourism with specially-designed subs.

BSkyB is a part of News Corp., which is of course controlled and run by Rupert Murdoch. Never one to back away from a good row, Murdoch took the step in order to keep ITV from becoming a larger player in the British market than his BSkyB was.

Eventually the situation was transferred to Britain’s Competition Commission where BSkyB was told they must divest of the 17.9 percent stake in ITV to below 7.5 percent. That was what triggered the series of appeals which the company has decided to quit doing, and why Morgan Stanley entered the picture.

It seems overall this was still a good move by BSkyB, as it kept the focus on the appeals, along with uncertainty if it was ever going to be accepted in their favor. That slowed down the progress of ITV, which bought BSkyB some time.

Another element that has helped BSkyB and hurt ITV during the duration of the battle has been the economic downturn, which had some speculating ITV was the target of a possible takeover. The decline in revenue and regulatory atmosphere concerning programming were all part of the takeover speculation as well.

This has been entertaining on both sides, as the highly competitive and determined Murdoch hasn’t lost too many battles in his business career, and Branson, who is the consummate showman, added some theater and flair to the circumstances, at one time accusing Murdoch of being a “threat to democracy.”

A statement from BSkyB said they plan on keeping the “residual 7.5 percent investment in ITV for the medium term and to remain a committed shareholder of ITV.”