Faced With Threat to Newspapers, Murdoch Withdraws BSkyB Bid [Updated]

By
Rupert Murdoch.

Update: Britain's political parties don't agree about much, but in the face of the spiraling News Corp. hacking scandal, they were united in their calls for the company to drop its $12 billion bid to take over television broadcaster BSkyB. And it worked: News Corp. has reportedly dropped its takeover attempt today, though it will retain a controlling stake in BSkyB. News Corp. hasn't fully closed the door to all future BSkyB attempts, but at least "for the foreseeable future," the company won't try again — especially since the hacking scandal doesn't seem to be going anywhere soon. The official News Corp. statement framed it as a problem of the moment, rather than a permanent obstacle: "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." Shares of BSkyB tanked as soon as the news hit.

Putting pressure on Murdoch to drop the bid represented a shift for Prime Minister David Cameron, who was giving up ground on the issue to Labour leader Ed Millibrand. Cameron was also losing the support of his party's coalition partners, the Liberal Democrats, whose own leader, Nick Clegg, came out from under Cameron's wing to call for Murdoch to drop the bid, a day before Cameron's own calls for the same. Despite Cameron's last-minute switch, the dropped bid is being interpreted as a triumph for Millibrand. Clegg, too, was quick to crow, saying that withdrawing the bid was the "decent and sensible" thing to do.

It's no longer just British politicians who want Murdoch's head on a platter: Senator Jay Rockefeller warned that if it turns out any U.S. citizens were targets, there would be "serious consequences" in the States, where Murdoch's holdings include Fox News, The Wall Street Journal, and the New York Post. (News of the World journalists reportedly targeted the cell phones of 9/11 victims.)

News Corp. reached the decision to drop the bid only after intense pressure. One "government insider" told Reuters that Murdoch would need to sell off his three remaining newspapers (the Sun, the Times of London, the Sunday Times) in order to get the go-ahead on the BSkyB deal, a quid pro quo that would completely change the face of the company in Britain. And would sting for Murdoch — the division is "one of his favorites."

But in order to even strike that deal, News Corp. would have needed to find buyers for the three papers. None appeared forthcoming, given the state of the newspaper industry. After all, nearly the only person who has appeared eager to sink new money into newspapers lately is ... Rupert Murdoch.

Phone-hacking scandal reaches US [Guardian UK]
News Corp. Weighs Next Steps [WSJ]
British parliament to vote against Murdoch deal [Reuters]
Connections to Murdoch Start to Chafe British Leader [NYT]