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London - News Corp has withdrawn its $12bn bid to buy out the 61% of broadcaster BSkyB it does not already own after the government turned on Rupert Murdoch over a phone hacking scandal.
British Prime Minister David Cameron welcomed news of the withdrawal, his office said. “The business should focus on clearing up the mess and getting its own house in order,” a spokesperson for Cameron said.
Parliament was due to pass a non-binding vote on Wednesday afternoon to tell Rupert Murdoch to drop his bid after News Corp's UK newspaper arm News International was engulfed in a scandal over phone hacking.
BSkyB shares were down 3.6% after the news.
"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," said Chase Carey, Deputy Chairperson, President and Chief Operating Officer, News Corporation.
"News Corporation remains a committed long-term shareholder in BSkyB."
Analysts said they were not surprised.
"I think with such universal political disapproval it would have been foolhardy to carry on at this stage," said Evolution analyst Steve Malcolm."
"I think they need to get the phone hacking investigation and the judicial reviews completed, see what gets thrown out of that and regroup. If they are in position at the end of that to have another look at it then they are, but at the moment it would be a futile pursuit given the public and political objections and disapproval."
Ian Whittaker at Liberum said it was difficult for News Corp to continue with the bid following the "savage attacks" being dealt out in parliament.
"Probably they also didn't want the spotlight on them," he told Reuters. "There are worries about it spreading to the US."
News Corp made the bid for BSkyB last June and said the two companies would secure regulatory approval before negotiating the price. Murdoch's company had expected to get approval by now, but the bid was derailed after the hacking scandal exploded again last week.
British Prime Minister David Cameron welcomed news of the withdrawal, his office said. “The business should focus on clearing up the mess and getting its own house in order,” a spokesperson for Cameron said.
Parliament was due to pass a non-binding vote on Wednesday afternoon to tell Rupert Murdoch to drop his bid after News Corp's UK newspaper arm News International was engulfed in a scandal over phone hacking.
BSkyB shares were down 3.6% after the news.
"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," said Chase Carey, Deputy Chairperson, President and Chief Operating Officer, News Corporation.
"News Corporation remains a committed long-term shareholder in BSkyB."
Analysts said they were not surprised.
"I think with such universal political disapproval it would have been foolhardy to carry on at this stage," said Evolution analyst Steve Malcolm."
"I think they need to get the phone hacking investigation and the judicial reviews completed, see what gets thrown out of that and regroup. If they are in position at the end of that to have another look at it then they are, but at the moment it would be a futile pursuit given the public and political objections and disapproval."
Ian Whittaker at Liberum said it was difficult for News Corp to continue with the bid following the "savage attacks" being dealt out in parliament.
"Probably they also didn't want the spotlight on them," he told Reuters. "There are worries about it spreading to the US."
News Corp made the bid for BSkyB last June and said the two companies would secure regulatory approval before negotiating the price. Murdoch's company had expected to get approval by now, but the bid was derailed after the hacking scandal exploded again last week.
