Murdoch withdraws bid for BSkyB

Ripples spread to US & Australia, as Cameron orders probe on phone hacking.

Media baron Rupert Murdoch’s News Corporation has withdrawn its bid to acquire full control of satellite broadcaster BSkyB.

The decision, considered inconceivable until yesterday, happened this afternoon after the ruling Conservative party joined hands with its Liberal Democrats’ coalition partner in backing a motion from the opposition Labour party, asking Murdoch to withdraw his bid for full control of BSkyB.

The New York-based company, in a brief statement issued today, said it no longer intended to make an offer for the entire issued share capital of British Sky Broadcasting Group Plc not already owned by it (it has 39 per cent).

Chase Carey, deputy chairman, president and chief operating officer, News Corporation, said, “We believed 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. News Corporation remains a committed long-term shareholder in BSkyB. We are proud of the success it has achieved and our contribution to it.”

News Corp was hoping to take full control to enable it to hasten global expansion plans that would have followed the delisting of BSkyB from stock exchanges. The statement issued by the company today stayed away from making any commitments on whether the decision was an interim fire-fighting gesture or if it may renew attempts to bid again in the future. Reference to the “climate” in the statement issued today, however, suggested it could renew its plans to gain full control of BSkyB.

STACKED ODDS
Murdoch, whose five-decade rise to power has been partly based on supporting one major political party against another, today ironically became the reason for the rare unity displayed by all three major political parties in Britain. The Conservative party, leading coalition partner in the government, backed the opposition Labour’s move in urging Murdoch to drop News Corp’s bid. The minor partner in the ruling coalition, the Liberal Democrats, had last week supported Labour’s move. Its leader and Deputy Prime Minister, Nick Clegg, had urged Murdoch to “do the decent and sensible thing and reconsider, think again, about your bid for BSkyB”.

Minutes after Prime Minister David Cameron had left Parliament after attending the weekly Prime Minister’s Question time, the statement from News Corp announced it was withdrawing the bid to acquire all the shares in BSkyB. Had this statement not come, Labour had intended to table a motion in the House of Commons which would have been backed by the ruling coalition. Labour leader Ed Miliband said, “It is a victory for people up and down the country. You cannot exercise power in this country without responsibility. That includes people in the board room.”

The bid withdrawal, however, does not end the controversy surrounding the phone hacking scandal that has engulfed the British media. Cameron today announced a public enquiry into the scandal would start immediately, by Lord Justice Leveson, who would have the power to call any witness, including journalists, media proprietors, executives and policemen.

It also emerged that the Home Affairs Select Committee, also looking into the scandal, has called Murdoch to appear next Tuesday as a witness. However, Murdoch is not under any legal obligation to do so.

Former prime minister Gordon Brown, himself apparently a victim of the alleged phone hacking, is to have his claims in this regard probed by the inquiry set up today, along with those of 4,000 other alleged victims.

Since the scandal came under global media scrutiny from July 4, News Corp’s share price has lost nearly a fifth of its value.

News Corp’s had last week tried to regain public confidence by closing its Sunday tabloid at the centre of the scam, News of the World. It is still being speculated that the group’s daily tabloid, The Sun, would soon start a Sunday edition, a plan neither confirmed nor denied by News Corp.

Elsewhere
The controversy surrounding the phone hacking scandal that originated in the British Isles has spread to other parts of the world where Murdoch’s News Corp is in active business. US Senator John D Rockefeller IV issued a statement on the reports that its now closed publication, News of the World, engaged in phone tapping and other illegal activities.

“The reported 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, and I encourage the appropriate agencies to investigate to ensure that Americans have not had their privacy violated. I am concerned that the admitted phone hacking may have extended to 9/11 victims or other Americans. If they did, the consequences will be severe.”

Meanwhile the group’s Australian arm, News Limited, is starting an internal audit covering a three-year period, on editorial expenditures.