Losing is not typically in Rupert Murdoch's lexicon.
But that's apparently what happened Wednesday when the media mogul's News Corp. was forced under pressure from many sides to withdraw its $12 billion acquisition bid for the 61 percent of British Sky Broadcasting it doesn't already own.
Now Murdoch is likely to face tough choices as he figures out the next move for News Corp., with some analysts suggesting he could sell off the global giant's newspaper arm to focus on more promising video and entertainment businesses.
"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.
News Corp. has faced growing ire over the past week amid growing disclosures that reporters and investigators for Murdoch-owned newspapers had intercepted phone messages of a murdered girl, other crime victims and bereaved families of soldiers.
News Corp. left itself the option to take another shot at BSkyB, Britain's top satellite television broadcaster and a key element in Murdoch's expansion in television. Analysts, however, think it will be some time before News Corp. can try again.
"The bid's not going to be revived at all anytime soon, so they'll just have to carry on as they were before," said Conor O'Shea, an analyst for Kepler Capital Markets.
Another bid would be politically difficult amid the current climate of anger against the company for the hacking scandal," analysts said.
"If they can I wouldn't be surprised if News Corp. tried to go for BSkyB again, but they would meet huge political and public opposition if they did," said media consultant Steve Hewlett.
Prime Minister David Cameron, who has faced awkward questions about his own relations with Murdoch, welcomed the news that the bid was dropped: "The business should focus on clearing up the mess and getting its own house in order," he said through a spokesman.
Opposition Labor leader Ed Miliband said it was a victory for those who had opposed the extension of Murdoch's power.
Earlier, Cameron told Parliament Murdoch should drop the bid while police investigated allegations that the News of the World hacked the voicemails of thousands of people looking for stories and also bribed police officers for information.
The press baron, who for decades has been both feared and courted by British politicians of all parties, shut down the 168-year-old Sunday tabloid last week in an effort to stem the scandal and save the BSkyB bid. But there was no stopping the flow of allegations and it had looked politically untenable.
Summoning a degree of national unity rarely seen outside times of war, all parties were due to endorse a motion later Wednesday in Parliament that was to urge Murdoch to drop it. It was unclear if that formal vote would now go ahead, after hours of debate in which hostility to Murdoch was unanimous.
The 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.
In Britain the scandal has stretched 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.
Earlier Wednesday, 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.
News Corp. shares rebounded Wednesday after shedding about $3 billion off the value of the company in recent days.
Investors returned their focus to the company's ballooning cash balance, with hopes that it will shed ownership of all its British newspapers as the company tries to contain damage from the phone-hacking scandal.
Nomura analyst Michael Nathanson said in an note that investors were shifting their view back to News Corp.'s strong fundamental underpinnings, which reside in its U.S. cable channels, such as Fox News, its movie studio 20th Century Fox and Fox broadcast network.
Nathanson said he saw upside to the shares with a target price of $21, compared with about $16 currently. All of News Corp.'s newspapers, including the U.K. newspapers and The Wall Street Journal, accounted for less than 3 percent of its $1.06 billion in operating profits in the most recent quarter.
"Perhaps this rebuke will force News Corp. to reconsider its ownership of U.K. newspapers," Nathanson said in the note. "We hope this is a turning point for the company's strategy and asset allocation as the ownership of highly inconsequential newspaper assets has forced the dropping of a strategically important asset."
As of March, News Corp. had amassed $11.8 billion in cash in preparation for the BSkyB deal. Assuaging investor concerns about what it would do with the cash if the deal was delayed or called off, the company decided Tuesday to raise the amount of shares it is buying back from the market to $5 billion over the next 12 months, up from a planned $1.8 billion.
Now that the deal is off completely, investors are looking for more insight into new ways the company will spend its money.