Takeover bid dropped in 'firestorm'

Rupert Murdoch's News Corporation has withdrawn its BSkyB takeover bid
12 April 2012

Rupert Murdoch's hopes of significantly expanding his media empire are in ruins after he dramatically bowed to political and public pressure and abandoned News Corporation's £8 billion bid for BSkyB.

The company has admitted that the outrage sparked by allegations about its UK newspapers meant that a deal to take full control of the satellite broadcaster was "too difficult to progress".

The decision to scrap the deal came just before the House of Commons united in its support for a motion tabled by Labour leader Ed Miliband calling for News Corp to drop the plan.

In a debate on the motion, former prime minister Gordon Brown, whose claims about how The Sun obtained details of his baby son's medical condition have been fiercely denied by the newspaper, made a rare appearance in the Commons to angrily attack News International, the News Corp company which publishes The Sun, Times, Sunday Times and the News of the World.

He branded it "a criminal media nexus" which "claimed to be on the side of the law-abiding citizen" but in fact stood "side by side with criminals against our citizens", adding: "Others have said that in the behaviour towards those without a voice of their own, News International descended from the gutter to the sewer. The tragedy is that they let the rats out of the sewer."

The loss of the deal is a major blow for News Corp which was hoping to tap into BSkyB's strong cash generation and complement its own global empire of newspapers and media outlets, which include Fox News.

The proposal to buy the 61% of BSkyB shares News Corp does not already own would have been one of Mr Murdoch's biggest deals.

It seemed in little trouble until last week when revelations about the alleged hacking of murdered schoolgirl Milly Dowler's phone unleashed what Prime Minister David Cameron on Wednesday described as "a firestorm which is engulfing parts of the media, parts of the police, and indeed our political system's ability to respond".

News Corp deputy chairman Chase Carey said: "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." He said News Corporation would remain a long-term shareholder in BSkyB.

Meanwhile, a 60-year-old man has been arrested over phone hacking at the News of the World. Detectives from Operation Weeting - the Scotland Yard investigation into mobile interceptions by News International - are understood to have raided an address in west London.

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