BSkyB is considering a legal challenge to a decision taken yesterday by John Hutton, the Business Secretary, which forces the satellite broadcaster to cut its holding in ITV from 17.9 per cent to 7.5 per cent.

Laywers said, however, that it would be hard for Sky to succeed with an appeal. That would leave Sky with an estimated nine months to sell down the shares, crystallising a substantial loss on the investment.

Sky said yesterday that it would make a £343 million write-off when it reported results early next month, reflecting the fall in ITV's share price and a belief that the stock was no longer worth the 135p a share that Sky paid when it swooped on its rival.

ITV shares closed at 73p yesterday, adding 1p, and Sky improved 18p to 549p amid relief that a draconian penalty had not been not imposed. News Corporation, parent company of The Times, owns 39.1 per cent of BSkyB.

Sky said yesterday that it was giving “careful consideration” to the announcement and, by implication, to an appeal to the Competition Appeal Tribunal. However, one source close to the broadcaster said: “If the lawyers thought there was a scintilla of a chance, they would go for it.” The company has a month to decide.

Becket McGrath, a partner at Berwin Leighton Paisner, said: “It's going to be an uphill struggle for Sky to win. Sky has to show there has been an error in law, manifest unreasonableness or procedural unfairness. The whole regulatory process is designed to be as appeal-proof as possible.”

Mr Hutton took no risks with his final ruling yesterday. His seven-page statement endorsed the conclusions reached by the Competition Commission at the end of last year. It was also disclosed that no minister had held formal meetings with any of the parties, although Sky executives did meet “senior competition officials” at the Department for Business, Enterprise & Regulatory Reform.

Only in one area did Mr Hutton exercise discretion, agreeing that the timetable for Sky's forced disposal should not be made public. However, with ITV arguing for three to six months and Sky pressing for 17 to 20 months, there were suggestions yesterday that the minister had reached a compromise of about nine months. The clock for a sale will not start until any appeal process is exhausted.

Anthony Woolich, a partner in the business law firm LG, said: “By apparently giving BSkyB a longer period to sell down its stake than is usual, the Government has lessened any charge that the ruling is unreasonable in commercial terms, although this will have the effect of leaving ITV in commercial limbo for a longer period.”

The official statement from Mr Hutton's department said that he had “decided to make an adverse public interest finding” because “the transaction operates against the public interest taking into account only of the substantial lessening of competition within the UK market for all television”.

Worries about the impact on plurality in news, advertising sales and the buying of sports rights were dismissed. Mr Hutton and the Competition Commission accepted ITV's argument that Sky's stake at 17.9 per cent was enough to trigger competition concerns.

ITV said that it “warmly welcomes” the ruling. Virgin Media, frustrated in a bid for ITV by Sky's original stake purchase, said that it “endorses the finding”. It added: “We now hope this matter can be brought to a close.”

Television series

Nov 9, 2006: Virgin Media, then called NTL, outlines plans for a £5 billion takeover of ITV

Nov 17: BSkyB spends nearly £1 billion on a 17.9 per cent stake in ITV, thwarting NTL’s ambitions

Nov 19: Sir Richard Branson, the Virgin chairman, says that it is a “reckless and cynical attempt to stifle competition and secure creeping control of British media”

Nov 20: Ofcom examines Sky’s stake to see if it constitutes a change in control of ITV

Nov 21: ITV rejects NTL’s bid proposal

Nov 28: ITV appoints Michael Grade as executive chairman, a move that is welcomed by investors and advertisers

Dec 6: NTL withdraws ITV bid

Jan 12, 2007: OFT says Sky may have “material influence” over ITV

Feb 26: Alastair Darling, then Trade and Industry Secretary, calls for a review of Sky’s ITV stake

Mar 1: Sky pulls its channels from Virgin Media’s television service

Mar 7: ITV raises concerns with regulators about Sky’s holding

Apr 13: Virgin files a lawsuit with the High Court over the content dispute

Apr 27: Ofcom and OFT recommend investigation into Sky’s stake in ITV

May 24: Competition Commission launches investigation into Sky’s share of ITV

July 9: The Commission confirms that it will investigate the broader issue of the diversity of media ownership in the UK

Oct 2: Sky’s ITV stake is against the public interest, Commission says

Dec 20: The Commission says that BSkyB should cut its holding in ITV to less than 7.5 per cent

Jan 29: John Hutton, Business Secretary, says that BSkyB must reduce its holding to below 7.5 per cent and bans the broadcaster from taking a seat on the ITV board or selling the shares to an “associated person”

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax