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Murdoch's News Corp Drops BSkyB Bid Amid British, U.S. Pressure


News Corporation CEO Rupert Murdoch leaves his flat with Rebekah Brooks, chief executive of News International, in central London on July 10.

News Corporation CEO Rupert Murdoch leaves his flat with Rebekah Brooks, chief executive of News International, in central London on July 10.

In a stunning reversal, media mogul Rupert Murdoch has withdrawn his bid to take control of British Sky Broadcasting, bowing to political and legal pressure resulting from a phone hacking scandal at one of his company's biggest newspapers.

In a brief statement delivered to the London Stock Exchange, News Corps Deputy Chairman and President Chase Carey said, "It has become clear that it is too difficult to progress in this climate."

Before the scandal broke wide open last week, the bid by Murdoch's media empire, News Corporation, to gain full control of Britain's biggest broadcaster, known as BSkyB, was seen as heading for success.

But following shocking revelations that staff at his "News of the World" tabloid had hacked into the voicemail messages of a murdered child, terror victims, and fallen soldiers, political support in Parliament turned sharply against the deal.

Conservative Prime Minister David Cameron, who is facing criticism over his friendship with former "News of the World" editor Rebekah Brooks and for hiring her successor as his spokesman, said on July 12 his party would support a motion introduced by the opposition Labour Party to urge Murdoch to drop his bid.

Earlier on July 13, Cameron announced the appointment of a senior judge to head an official inquiry into the phone-hacking and alleged police-bribery scandal. He referred to the situation as "a firestorm...that is engulfing parts of the media, parts of the police, and indeed our political system's ability to respond."

Following News Corporation's decision to drop its bid, he told CNN that Murdoch had made the correct decision.

"I've been saying that this company clearly needs to sort out the problems there are at News International, at the 'News of the World.' That must be the priority, not takeovers," Cameron said.

"So, [it's] the right decision, but also the right decision for the country too. But we've now got to get on with the work of the police investigation and the public inquiry that I've set up today."

Murdoch has acknowledged the hacking and last week closed down his top-selling "News of the World" newspaper after reporters at the tabloid were accused of bribing police for information and hiring investigators to hack into the voicemails of thousands of people, including dead British soldiers and a murdered schoolgirl.

But the closure, widely seen as an attempt to salvage Murdoch's $14 billion bid for full control of BSkyB, has failed to soothe public anger in Britain.

His retreat on the deal means he has had to walk away from what was potentially the most lucrative prize in his legendary career as the world's most powerful media mogul.

Murdoch, his son James, and Brooks have been summoned to answer questions by a legislative parliamentary committee next week, although as a U.S. citizen Murdoch has no obligation to attend.

Former British Prime Minister Gordon Brown has added pressure on News Corporation, accusing it of illegally obtaining his private documents to break the news of his son's illness -- a claim denied on July 13 by Murdoch's tabloid "The Sun."

The scandal has also dealt a severe financial blow to News Corporation, whose shares have lost 14.6 percent on Wall Street over the past week.

The fallout now threatens to spread to the United States, where Murdoch owns several leading media outlets including "The Wall Street Journal," the "New York Post" and Fox Broadcasting.

U.S. Senator John Rockefeller -- a Democrat who heads the committee on commerce, science, and transportation -- on July 12 called for a U.S. investigation into News Corp.

Rockefeller voiced concern in a statement that the phone hackings could have extended to U.S. citizens, including victims of the September 11, 2001, attacks in the United States.

"If they did, the consequences will be severe," he warned.

compiled from agency reports
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