UPDATE 1-BSkyB to learn ITV stake fate Monday

Pay-TV firm BSkyB will learn on Monday whether it has won the right to keep its 17.9 percent stake in free-to-air broadcaster ITV.

BSkyB has challenged a ruling by the Competition Commission that it had to reduce the stake to below 7.5 percent, and the Competition Appeal Tribunal said on its website it would hand down its judgment at 1545 GMT on Monday.

BSkyB, with its then Chief Executive James Murdoch in charge, bought the stake in 2006 at 135 pence a share or 940 million pounds in a deal which effectively blocked cable group NTL -- now named Virgin Media -- from buying ITV.

Analysts believe BSkyB will try to hold on to the stake for as long as possible in the hope its value will rise and it could appeal against the ruling if it loses.

Shares in ITV, Britain's biggest terrestrial broadcaster, were trading down 1.7 percent at 43-1/4 pence at 0900 GMT, dragged down by economic concerns and the impact this will have on the advertising market.

"We believe that should the CAT rule against BSkyB, as we expect, then BSkyB will continue to appeal," said Numis.

"It has the right of appeal to the Court of Appeal (on a point of law), House of Lords (with permission) and the European Court of Justice. Further appeals could give time for ITV shares to recover."

Shares in ITV had edged higher in recent weeks as the impending CAT ruling sparked speculation that a sale of the stake could prompt a bid for the whole company.

Analysts at UBS said BSkyB would likely be given between 6 to 12 months to sell the stake, and also suggested that the group could place the stake in some sort of warehousing structure to retain some economic exposure to the stake.

"We believe Sky will not be in a hurry to crystallise a loss and that it will look to hold on in the hope that regulatory and macro visibility improves for the better for ITV," they said in a note.

"ITV is very highly geared to the ad market (1 percent change in advertising = around 9 percent change to earnings per share). The outlook for the UK economy is difficult at best -- as such there can be limited visibility over ITV's cashflow."

(Reporting by Kate Holton; Editing by Quentin Bryar) Keywords: BSKYB ITV/ tf.TFN-Europe_newsdesk@thomson.com ak

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