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Rupert Murdoch, chief executive officer of News Corp., is driven from his apartment in London Wednesday. The media giant withdrew its attempt to take over broadcaster BSkyB.
msnbc.com staff and news service reports
updated 7/13/2011 5:03:26 PM ET 2011-07-13T21:03:26

Rupert Murdoch's News Corp. Wednesday withdrew its bid to take over British Sky Broadcasting PLC amid growing political pressure stemming from a phone hacking scandal engulfing the media giant.

Murdoch was forced to step back from the biggest battle of his career over a lucrative prize, accepting that he could not win government acceptance of the takeover as Britain's major political parties had united against it.

"We believed that the proposed acquisition of BSkyB by News Corp. would benefit both companies, but it has become clear that it is too difficult to progress in this climate," News Corp. Chief Operating Officer Chase Carey said in a statement. The News Corp. statement said it would remain a long-term shareholder in BSkyB and it reserved the right to renew its bid, if permitted.

Prime Minister David Cameron welcomed the news, a spokesman said. The British parliament was due to pass a non-binding vote on Wednesday afternoon to tell  Murdoch to drop the planned $12 billion acquisition of the 61 percent of BSkyB not already owned by News Corp.

BSkyB shares fell on the news, while News Corp. shares, which have been under pressure, edged up.

News Corp. has been pummeled politically and financially in recent days by the phone-hacking scandal, which dates to 2002. The scandal erupted July 4 after it was revealed that investigators hired by Murdoch's News of the World, Britain's top-selling Sunday newspaper, had accessed and then erased messages on the cell phone of a missing 13-year-old girl, who was later found murdered.

Story: Murdoch empire left shaken as deal collapses

Since then the 168-year-old newspaper has been shuttered and public anger has grown over allegations that reporters spied on thousands of people, from the rich and powerful to vulnerable victims of crime.

Th scandal has spread to the United States with allegations that News Corp. journalists may have targeted American 9/11 victims with their phone-hacking practices.

Sen. John Rockefeller said Tuesday the scandal raised "serious questions" about whether the newspaper's parent company had broken any U.S. laws.

"I am concerned that the admitted phone hacking in London by the News Corp. may have extended to 9/11 victims or other Americans," he said. "If they did, the consequences will be severe."

Story: UK to investigate if 9/11 victims targeted in phone-hacking scandal

In Britain the scandal has spread into the political sphere with the arrest of Andy Coulson, former editor of News of the World who was forced to step down as Cameron's spokesman earlier this year. Coulson faces charges of corruption and conspiring to intercept communications.

And earlier on Monday, a source familiar with the situation told Reuters that Tom Crone, the legal manager at the Rupert Murdoch U.K. newspaper arm fighting widespread hacking allegations, has left the company.

Crone had been with News International for 26 years. He had oversight for all legal matters for the Sun and the News of the World for editorial. Spokeswoman Daisy Dunlop declined to say if Crone had resigned or been told to leave.

Murdoch, 80, is an Australian by birth who has acquired American citizenship and commands a news and media empire that extends around the world, with Fox News, Fox Entertainment, The Wall Street Journal and New York Post among the best-known brands.

"They've lost control of the situation completely. The police inquiry has turned up all sorts of things. ... This is massive and it's plainly not going to stop," said Steve Hewlett, media consultant to Sky News.

"Whether it ever calms down sufficiently for News Corp. to renew its bid - who knows?"

Reuters and The Associated Press contributed to this report.

Video: Murdoch’s next move

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