The Government today ordered BSkyB to sell more than half of its stake in ITV to increase competition among Britain’s broadcasters.

John Hutton, the Secretary of State for Business and Enterprise, said that BSkyB will have to reduce its 17.9 per cent shareholding to below 7.5 per cent. He did not disclose a deadline for the sale.

BSkyB, which is 39.1 per cent owned by News Corporation, the parent company of The Times, spent £940 million buying the stake at 135p per share in November 2006.

At the time it was seen as a move to scupper a possible bid for ITV by NTL, the cable TV company, and Sir Richard Branson, the Virgin entrepreneur.

A sale to below 7.5 per cent today would leave BSkyB with losses of more than £250 million following a 47 per cent fall in ITV’s share price since the deal.

BSkyB has up to four weeks to contact the Competition Appeal Tribunal if it decides to appeal.

Mr Hutton’s verdict comes after the Competition Commission ruled last month that BSkyB’s stake in ITV was “uncompetitive”.

He said today that a sale would address a "substantial lessening" in competition.

ITV is thought to have requested that BSkyB sell the shares within three months. However, it is believed that Mr Hutton has given the satellite broadcaster up to nine months' grace.

In a short statement today ITV said: “ITV warmly welcomes the Secretary of State’s decision to require BSkyB to divest its shareholding in ITV down to a level below 7.5 per cent within a set timeframe.

“We believe this decision is in the best interests of the overwhelming majority of our shareholders.”

BSkyB said that it would give "careful consideration" to the announcement and confirm any further steps in due course.

BSkyB has always denied that its move was part of an attempt to thwart an acquisition of ITV by the Virgin empire. Sir Richard Branson had branded BSkyB a threat to democracy.

Last May, Rupert Murdoch, BSkyB’s then chairman, said: “We have done nothing illegal. The 20 per cent limit in ownership [in the Communications Act] was known as the Murdoch clause, and we stayed under the 20 per cent.”

Explore Industry Sectors

• Banking & Finance

• Construction & Property

• Consumer Goods

• Engineering

• Health

• Industrials

• Leisure

• Media

• Natural Resources

• Retailing

• Support Services

• Technology

• Telecoms

• Transport

• Utilities

Times Recommends

• Bovis and Redrow axe close to 1,000 jobs
• Irate M&S shareholders demand fresh talks
• Investors rally to B&B amid fears of contagion