Murdoch pulls BSkyB bid amid British scandal

13th July 2011, Comments 0 comments

Rupert Murdoch dramatically dropped his bid for control of pay-TV giant BSkyB Wednesday, bowing to pressure from the British government over the phone-hacking firestorm at his newspaper empire.

Hours before Britain's three main parties were set to back an extraordinary parliamentary vote calling for the withdrawal of the bid, Murdoch's US-based News Corp. said it was now "too difficult to progress in this climate".

Prime Minister David Cameron welcomed the news, saying the Australian-born tycoon should focus on cleaning up his business after the scandal which forced the closure of the News of the World tabloid on Sunday.

After decades as Britain's political kingmaker, Murdoch has seen his empire threatened by a wave of public outrage over the hacking of voicemails belonging to people including a murdered girl and the families of dead troops.

"We believed that the proposed acquisition of BSkyB by News Corporation would benefit both companies but it has become clear that it is too difficult to progress in this climate," said News Corp. deputy chairman Chase Carey.

Carey said News Corp., which wanted to purchase the 61 percent of shares in BSkyB it did not own for £7.8 billion (8.6 billion euros, $12.5 billion), would remain a "committed long-term shareholder" in BSkyB.

The 80-year-old Murdoch had pushed for the bid as the broadcaster's portfolio includes live English Premier League football and blockbuster films, and this year reached its target of 10 million household subscribers.

Only a few months ago it looked like a sure thing, but the tide of scandal engulfing the News of the World the government put it on ice for at least six months on Monday by referring it to a competition watchdog.

Ed Miliband, the leader of the main opposition Labour party who had proposed the parliamentary motion urging Murdoch to drop the bid, said it was a "victory for the people".

"People thought it was beyond belief that Mr Murdoch could continue with his takeover after these revelations," he said.

A statement from Cameron's Downing Street office said: "We welcome the news. As the prime minister has said, the business should focus on clearing up the mess and getting its own house in order."

The scandal has spread out from Murdoch's newspapers to include the police, members of which allegedly received payments from the News of the World, to politicians accused of being too cosy with Murdoch.

The British premier has himself felt the heat as his media chief from 2007-2010 was former News of the World editor Andy Coulson, who was arrested on Thursday over allegations of voice hacking and paying off policemen.

Cameron told parliament earlier Wednesday he would support the non-binding motion, and announced the details of a full public inquiry into phone hacking, which he said would also include links between politicians and the press.

"There is a firestorm that is engulfing parts of the media, parts of the police and indeed parts of the political system," said Cameron.

He said the inquiry would have the power to summon newspaper proprietors, and warned that executives found guilty of wrongdoing could be barred from future roles in British media.

Murdoch, his son James -- the chairman of BSkyB and an executive at News Corp. -- and Rebekah Brooks, chief executive of News International, News Corp's British newspaper arm, have been called to give evidence to lawmakers next week.

It was reported separately Wednesday that Tom Crone, News International's legal manager, had left the company after 26 years.

In the United States, Senate Commerce Committee Chairman Jay Rockefeller called for an investigation to see if the phone-hacking scandal had spread to Murdoch's US operations, saying there could be "severe" consequences.

News Corp's shares have plummeted in the past week, and the Murdoch-owned Wall Street Journal reported that the media tycoon was considering selling off his remaining British newspapers, The Times, The Sunday Times and The Sun.

Shares in BSkyB were trading down 1.0 percent at 685 pence in late London deals after the announcement, but News Corp. shares gained 1.8 percent on the US Nasdaq index.

The Australian arm of News Corp. separately announced a review of its editorial expenditure over the last three years in a bid to reassure the public that illegal phone-hacking practices in Britain had not taken place there too.

© 2011 AFP

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