London Briefing: Breathtaking in its audacity and devastating in its simplicity: the move by British Sky Broadcasting to snap up a near £1 billion (€1.48 billion) stake in beleaguered broadcaster ITV last Friday evening was a masterstroke.
Markets had closed and dealers were drifting home for the weekend when the latest plot twist in the ITV corporate soap opera emerged.
The dramatic swoop on ITV shares sent shock waves through the British media industry - and won renewed respect for 33-year-old BSkyB chief executive James Murdoch, son and heir apparent of media mogul Rupert Murdoch.
By snapping up the 17.9 per cent stake in ITV, BSkyB has effectively blocked any chances of the ailing group merging with cable operator NTL or RTL Group, Europe's largest commercial broadcaster.
NTL emerged as a potential bidder for ITV a fortnight ago while RTL, along with private equity partners, was also understood to be assembling an offer worth £5 billion.
Now ITV is stuck in limbo. The BSkyB stake is within the 20 per cent limit allowed by broadcasting regulators but the move has enraged NTL, soon to be renamed Virgin Media. Its largest shareholder is Sir Richard Branson and he reacted with fury at what he sees as BSkyB's blocking tactics.
Blasting the move as reckless and cynical, he says he will appeal to regulators in Britain and Europe in an attempt to force BSkyB to offload its shares.
It is not clear what the regulators could, or should, do, however. Although nobody really believes him, Murdoch jnr insists that he intends to be a supportive shareholder and has no plans either to buy more shares in ITV or make a full-scale bid (which, under competition laws, he would be prohibited from doing anyway).
But BSkyB has broken no competition laws in acquiring the ITV shares and could have taken its stake in the broadcaster up to 19.9 per cent.
All this comes as ITV, first founded in 1955 as a commercial rival to the state-owned BBC and created in its current form through the merger of Carlton and Granada in 2004, struggles to retain its audience share and shore up its crumbling advertising revenue.
It remains without a chief executive following the departure of Charles Allen and the Murdoch intervention will not have made the search easier; who in their right minds would risk their reputation joining a company in such disarray?
The company behind programmes such as the long-running soap Coronation Street and, more recently, I'm a Celebrity, Get Me Out of Here and The X-Factor, has failed to capitalise on the digital revolution.
It's ITV digital business collapsed and its takeover of the Friends Reunited website now looks somewhat beside the point when measured against the growing popularity of new media businesses such as MySpace.com, bought by Rupert Murdoch last year, and YouTube.com, the video clip website.
The view in the City of London is that Branson faces an uphill struggle in his efforts to persuade the competition authorities to act against BSkyB. They are not writing off the Virgin billionaire completely, however. He is not short of inspirational moves himself, although at this stage his room for manoeuvre looks limited.
Meanwhile, shareholders in ITV look to have been robbed of the chance of seeing their shares rise on the back of a bid battle between NTL and RTL. Directors of ITV yesterday formally rejected terms of a cash and shares offer from NTL, which valued ITV at just over 120p a share, saying it undervalued the company.
Not all shareholders have lost out, however. The bulk of BSkyB's £940 million share stake, bought on Friday at a sweetheart price of 135p a share, came from the fund management group Fidelity.
So, once again, Fidelity's legendary stock picker, Anthony Bolton, has played a key role in the fortunes of ITV. The man known in the City of London as "the Silent Assassin" blackballed Carlton's Michael Green from taking over as chairman of the combined group when Carlton and Granada merged a few years ago. More recently, he was instrumental in encouraging NTL to proceed with its merger proposals.
But the offer of 135p a share from BSkyB persuaded him to sell. By all accounts, he did not take much persuading.
After more than quarter of a century picking the stocks that turned his Special Situations fund into the biggest and best-performing UK equity fund in the market, Bolton is due to retire at the end of next year. ITV was one of the rare "dogs" in his portfolio and he was said to be determined to rectify that before he left.
For the remaining shareholders, 135p a share looks a long way away, although the ITV price has been supported this week by the fact that Fidelity appears to be back in the market rebuilding a share stake.
There is one consolation for investors: they are playing the role of extras in a soap opera more exciting that anything served up by ITV's commissioning editors.
And with characters such as the Murdochs and Sir Richard Branson on the cast list, not to mention "the Silent Assassin", it would be foolish to rule out another dramatic plot development in the weeks ahead.
Fiona Walsh writes for the Guardian newspaper in London
