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BSkyB bought the shares in 2006, paying £960m for it. The matter was referred to the Competition Commission in 2007, and in 2008 BSkyB was ordered to cut its stake to below 7.5%. It said the stake gave the company undue influence in the UK media and it was therefore not in the public interest.
BSkyB's original investment sparked a fierce public row between the company, led by its then-chief executive James Murdoch, and Virgin Media's largest shareholder, the entrepreneur Richard Branson. Mr Branson accused the Murdoch media empire of being a “threat to democracy" while politicians also questioned the move.
BSkyB has fought hard to keep hold of the shares, going through a series of court appearances - which it lost. Its last chance was to go to the Court of Appeal - a move which it was told would be unlikely to result in success.
In a statement the company said: “Sky intends to retain its residual 7.5% investment in ITV for the medium term and to remain a committed shareholder of ITV."
ITV shares closed down 2.3% at 51.3 pence before the announcement. BSkyB, which bought the ITV shares priced at 135 pence, itself closed flat.
ITV recently ended its long-running search for a chief executive, attracting Adam Crozier from his post as head of the Post Office. He joins another heavy-hitting management figure, Archie Norman, now chairman of ITV. His past positions include being a Conservative MP and the boss of supermarket giant Asda.
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