Murdoch pulls BSkyB amid British scandal

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

Hours after Prime Minister David Cameron backed an opposition parliamentary motion calling for the withdrawal of the bid, Murdoch's News Corporation said it was now "too difficult to progress in this climate".

Cameron's Downing Street office welcomed the news, saying the Australian-born tycoon should focus on getting his business in order after the hacking scandal which forced the closure of the News of the World tabloid on Sunday.

The hacking of voicemails including those of a murdered girl and the families of dead soldiers released a tide of public outrage which has threatened to sink the empire of Murdoch, for decades Britain's political kingmaker.

"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.

In a statement, Carey said News Corp. would remain a "committed long-term shareholder" in BSkyB. It currently owns 39 percent of the satellite broadcaster's shares and wanted to purchase the remaining 61 percent.

The BSkyB bid had been seen as crucial for News Corp. as the broadcaster has a portfolio including live English Premier League football and blockbuster films, and this year reached its target of 10 million household subscribers.

A Downing Street statement 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 announcement came shortly before Britain's parliament was set to vote on a motion introduced by Ed Miliband, leader of the opposition Labour party, calling on Murdoch to drop the bid.

Cameron told parliament earlier Wednesday he would support it, in a rare show of cross-party unity.

The pressure on Murdoch looked set to continue as Cameron called for "root and branch change" at his British newspaper group, News International, and warned that executives found guilty of wrongdoing could be barred from future roles in British media.

Cameron also announced the details of a full public inquiry into the phone hacking scandal, saying that it would also cover the relationships between politicians and the media.

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

He said he had personally ensured that a full public inquiry into the scandal, to be led by Lord Justice Brian Leveson, would have the power to summon newspaper proprietors, in a clear nod to Murdoch.

He also warned that those found to be responsible for the wrongdoing, who sanctioned it or covered it up, must "have no future role in the running of a media company in our country".

Murdoch, his son James -- the chairman of BSkyB and an executive at News Corp. -- and Brooks have been called to give evidence to lawmakers next week over phone hacking and claims that newspapers payed police for information.

It was reported separately 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.

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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