After intense lobbying from MPs, the government is sending media regulator Ofcom in to investigate the BSkyB deal with ITV.
The media giant, which bought a 17.9% stake in the UK TV company for £940 million in November, but faced criticism of amassing a monopoly in British broadcasting.
Trade and Industry Secretary Alistair Darling said: “It is appropriate for me to…ask Ofcom to conduct an initial investigation into the public interest issues that may be raised by this transaction."
At the time, Sir Richard Branson, who became NTL's largest shareholder after its merger with Virgin Mobile to subsequently become Virgin Media, said the move was designed to block a rival bid for ITV by NTL as a “blatant attempt to distort competition”.
Since then, relations between BSkyB and Virgin Media have worsened as negotiations to renew the latter’s cable TV subscription to show Sky Basic channels broke down.
The companies have just two days to reach agreement before the present contract runs out. The loss of carrier revenue from Virgin could cost £15-20m in operating profit if a deal cannot be reached.
But BSkyB in the meantime has said it will cooperate with the Ofcom probe.