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updated 7/8/2011 12:45:35 PM ET 2011-07-08T16:45:35

Satellite broadcaster British Sky Broadcasting PLC saw its share price plunge by nearly 8 percent Friday after British Prime Minister David Cameron indicated that the government was not going to wave News Corp's bid for the company through any time soon.

In a hastily arranged press conference, Cameron said the government was doing everything by the book but that a final decision on News Corp.'s bid would take "some time" given recent events.

His comments were later echoed by Culture Secretary Jeremy Hunt, who is assessing News Corp.'s attempt to bid for the 61 percent of shares in BSkyB that it doesn't already own. Hunt remains under pressure from opposition politicians to refer the bid to the Competition Commission for a full-scale monopoly review which could delay a decision even further.

With the decision pushed further out into the future, investors extended a slide in BSkyB's share price that began on Tuesday as public fury mounted over phone hacking by the Sunday tabloid News of the World, which is part of Rupert Murdoch's British press holdings.

BSkyB's share price closed down 7.6 percent at 750 pence ($12). That means the company's market value lost over one billion pounds ($1.6 billion) over the day.

Its woes infected the shares of Nasdaq-listed News Corp. too. The owner of 39 percent of BSkyB saw its share price fall 3.9 percent at $16.75 around midday in New York.

The declines suggest that Thursday's gambit by James Murdoch, his father's heir-apparent, to close down the News of the World after this Sunday's edition has failed to assuage investor concerns about the future of the BSkyB bid. Many observers saw the dramatic announcement to close the scandal-ridden tabloid as a ruse to save the BSkyB bid.

Alex DeGroote, analyst at Panmure Gordon, called the closure "a cynical attempt to improve the prospects of regulatory approval for the News Corp. deal with BSkyB" which is unlikely to work.

DeGroote said it was now more likely that OFCOM, the communications regulator, will have to review its position that News Corp. executives are "fit and proper" persons to hold a broadcasting license.

"Leaving the legalities to one side, we cannot believe it makes political sense for a fragile coalition (government) to let this pass without thorough and fresh scrutiny," he said.

Story: Ex-aide to British PM leaves UK police station

OFCOM, the British media regulator, released a letter on Friday which served to signal that it is watching News Corp. and BSkyB very closely to be sure that directors and controlling shareholders are "fit and proper" persons to hold a broadcasting license.

It informed John Whittingdale, chairman of the House of Commons media committee, that it would not prejudge the outcome of the current investigations. OFCOM, which had earlier given its OK to the News Corp. bid, has the power to deny or revoke a license.

In a sign of further trouble, French car company said on its Twitter feed that it would not be investing in any of News International's titles "pending the formal investigations." News International is the U.K. subsidiary of News Corp., which also owns a wide variety of media assets around the world, including Fox News, The Wall Street Journal, and The Australian newspaper.

In addition to the one more edition of News of the World, News International, publishes The Sun, The Times and The Sunday Times.

The closure of the News of the World was having repercussions all across the British media sector.

Shares in Trinity Mirror PLC closed up around 4 percent as investors conclude that its Sunday publications will be able to pick up readers from the axed News of the World, which was the most read British newspaper.

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Timeline: Tabloid stir: Phone-hacking scandal intensifies

Video: UK tabloid closes over phone-hack scandal

  1. Closed captioning of: UK tabloid closes over phone-hack scandal

    >>> new fallout in morning in the "news of the world" phone hacking scandal. one of the tabloid newspaper 's former editors has now been arrested a day after rupert murdoch announced he's shutting down the 168-year-old paper. nbc's mike taibbi has more. mike?

    >> reporter: the so-called phone hacking scandal has been around for years. six years, to be precise. but in the past week it went from a story about celebrity cell phones being hacked to regular people as alleged victims, including the grieving relatives of crime victims or soldiers killed in action and the explosion that's followed led to the extinction of the biggest circulation newspaper in the english speaking world . media barron rupert murdoch has had little to say as the scandal jumped to another level.

    >> i'm not making any comments.

    >> reporter: but son james murdoch said if the allegations are true, the newspaper's behavior was inhuman.

    >> i feel regret. clearly the practices of certain individuals did not live up to the standards and quality of journalism that we believe in.

    >> reporter: one practice that met no standards, that grieving rel tis of murdered children, or of british soldiers killed in action, had their cell phones hacked, and their voice mail messages accesses.

    >> if these actions are proved to have been verified, i'm appalled and find it quite disgusting.

    >> reporter: so did prime minister david cameron and both sides of the aisle in a rare emergency session of the house of commons all in agreement that the public needs to know who was hacked, who did it, and who knew about it.

    >> once we know that, then we will know where the blame lies and obviously the people responsible must pay a penalty.

    >> reporter: one person murdoch says is not responsible is rebecca brooks, the paper's former editor and still a top corporate executive. critics have charged that murdoch chose to save her rather than one of britain's oldest newspapers. at age 80, murdoch 's once bulletproof reputation has been shaken.

    >> the reports that this is the end of murdoch or this is the death of murdoch in a business sense are probably overstated. but it does give one pause to see a scandal of this proportion really spiral out of control.

    >> reporter: hacking the phones of celebrities and politicians was one thing. but harvesting the grieving voicemails of ordinary people dealing with tragedy triggered an explosion of revulsion that could not be contained. with advertisers abandoning the paper, its closing will put some 200 employees out of work and there are publish reports today that there are more arrests coming, perhaps within days, several investigations now under way.

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