Rupert Murdoch's News Corp announced it was squashing plans to take over Britain's largest TV broadcaster, a drastic result of the media giant's entanglement in a slew of phone hacking and bribery allegations.
The New York- based media empire said Wednesday it would withdraw the offer for the 61 per cent of British Sky Broadcasting (BSkyB) it doesn't already own.
The announcement came two hours before a vote in the U.K. parliament supported by British Prime Minister David Cameron would have called on Murdoch to abandon the deal.
In a brief, four-sentence statement, News Corp. acknowledged 13 months after launching its bid that it would not win British government acceptance of the takeover because the country's major political parties had united against it.
"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," News Corp. deputy chairman and president Chase Carey said in a brief statement to the London Stock Exchange.
It's unclear if the parliamentary vote would now go ahead.
Labour Party leader Ed Miliband, who had mobilized all of Britain's major parties to unite behind the motion that would have urged Murdoch to back off the BSkyB bid, was pleased with News Corp.'s decision.
"This is a victory for people up and down this country who have been appalled by the revelations of the phone hacking," he said.
"People thought it was beyond belief that Mr. Murdoch could continue with his takeover after these revelations."
Cameron, too, welcomed the news: "The business should focus on clearing up the mess and getting its own house in order," he said through a spokesman.
The potential BSkyB deal could have been Murdoch's biggest and most lucrative acquisition.
Shares in BSkyB fell four per cent after News Corp's announcement, but eventually rebounded and closed two per cent higher.
Outrage in Britain and the rest of the world has grown since a report last week that the News of the World tabloid hacked into the cellphone of teenage murder victim Milly Dowler in 2002 and may have impeded the police investigation into her disappearance.
That ignited public outrage that went far beyond anything raised by years of allegations of similar hacking into the phones of sports stars and celebrities, including Hugh Grant and Sienna Miller. The News of the World did eventually admit to the intrusions and offered cash settlements to some.
The paper is also alleged to have hacked into the phones of the families of the July, 2005, London bombing victims, as well as using a private investigator to access the phone numbers of relatives of service personnel killed in Iraq and Afghanistan.
News of the World was Murdoch's first British acquisition in 1969. Many credit the same allegations that sunk the tabloid with sinking News Corp.'s bid for BSkyB.
Police have arrested eight people already in their investigation, including Cameron's former communications director Andy Coulson, a former editor of News of the World. No one has been charged.
Ramifications for News Corp. and its executives -- particularly Murdoch's son James, head of News Corp.'s European and Asian operations, and the company's British chief Rebekah Brooks -- are still playing out.
Cameron announced earlier Wednesday he would put a senior judge in charge of the inquiry into the phone hacking and police bribery allegations. He also vowed to investigate an allegation that a U.K. reporter may have sought the phone numbers of 9/11 terror victims in a quest for "scoops."
"There is a firestorm, if you like, that is engulfing parts of the media, parts of the police, and indeed our political system's ability to respond," Cameron said in the House of Commons.
Cameron appointed Lord Justice Brian Leveson to lead the inquiry, which will be able to compel witnesses to give evidence under oath -- including government figures.
Leveson will first investigate the culture, practices and ethics of the press, its relationship with police and the failure of the current system of self-regulation.
The inquiry is expected to last up to one year.
Also Wednesday was a report in The Wall Street Journal, also part of News Corp., that Murdoch had met with advisers over recent weeks to discuss selling his remaining British newspapers: The Sun, The Times and The Sunday Times.
The Journal, citing unnamed sources, said there didn't appear to be any buyers, given the poor economics of the newspaper division.
With a report from CTV's Craig Oliver and files from The Associated Press
