News International withdraws BSkyB bid

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by a Newsnet reporter

Following unprecedented policital pressure fuelled by public outrage over the News of the World phone hacking scandal, News International has withdrawn its multi-billion bid to take over all of the shares in the satellite broadcaster BSkyB.  Announcing News International’s reversal of its long term goal to increase its control over broadcasting and the media in the UK, Chase Carey, the company’s deputy chairman, said today: “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.”

A vote on the takeover bid was to be held in the House of Commons on Wednesday.  Unusually, the government supported the opposition’s motion to oppose the bid.  With all the main political parties about vote against and a united government and opposition, News International had no option but to withdraw.  The move leaves the company’s business strategy in tatters and is the greatest crisis faced by Mr Murdoch since he established the company.  When the news that the bid was off was announced, shares in News International dropped sharply in value, however share prices rallied during the day.

On hearing the News that the bid had been withdrawn, Nick Clegg, the deputy prime minister, said that it was the “decent and sensible” thing do to.  Earlier this week Mr Clegg had threatened to cause a split in the coalition government by declaring his belief that Mr Murdoch should abandon the bid.  The potential split was avoided when David Cameron announced that the Conservatives would also support the Labour motion to block the take-over.

The reputation of News International is at an all time low.  Just a few short weeks ago, British politicians queued up to ingratiate themselves with the company and its newspapers.  Now politicians vie with one another to put as much distance between themselves and the company as possible.

It is no longer just the British political establishment which is trying to disassociate itself from Murdoch’s companies.  In the USA Senator Jay Rockefeller has warned that if it turns out any US citizens were targets of phone hacking or other illegal activities by reporters employed by News International’s publications, there would be “serious consequences” for the company in the USA.  Speaking to the Times Senator Rockefeller said that the illegal phone-hacking “by News Corporation newspapers against a range of individuals — including children —  is offensive and a serious breach of journalistic ethics.  This raises serious questions about whether the company has broken US law.”

The company has substantial investments in the country, News International’s holdings in the USA include the Wall Street Journal, the New York Post, and the right wing news channel Fox News.

Meanwhile, in another development, it has been announced that the head of News International’s legal team is to leave the company.  Tom Crone was the lawyer with final responsibility for signing off the more controversial stories published by the group’s newspapers.