Murdoch drops £8bn bid for BSkyB amid public outrage
Cameron praises move as probe into phone hacking launched
Media tycoon Rupert Murdoch yesterday dramatically withdrew News Corporation's £8bn (€9.1bn) bid to take over satellite broadcaster BSkyB.
It was a desperate response to the "firestorm" of public and political anger over phone hacking at the 'News of the World'.
The move came shortly after British Prime Minister David Cameron appointed senior judge Lord Justice Leveson to head a public inquiry into the hacking allegations and just hours before MPs backed a Labour motion condemning the takeover plans without a vote.
Mr Cameron said News Corp had made "the right decision" in dropping its bid to buy the 61pc share in BSkyB that it did not already own, while his deputy Nick Clegg described it as "the decent and sensible thing to do".
Labour leader Ed Miliband hailed the development as "a victory for people up and down this country who have been appalled by the revelations of the phone hacking scandal and the failure of News International to take responsibility".
The collapse of the takeover bid was announced by News Corp deputy chairman Chase Carey, who said it had "become clear that it is too difficult to progress in this climate". The company would remain "a committed long-term shareholder in BSkyB".
Shares in BSkyB rallied slightly after the announcement from a low of 683.5p earlier yesterday, but remained significantly below the 850p they achieved earlier this month on hopes of a deal with News Corp.
BSkyB chief executive Jeremy Darroch said the broadcaster remained "very confident in the broadly based growth opportunity" for its business.
Downing Street said Mr Cameron received no advance notice of the announcement.
Welcoming the development, Mr Cameron said it was time to get on with the inquiry into hacking and with the continuing police investigation into claims that 'News of the World' reporters illegally eavesdropped on private phone messages.
"I think this is the right decision," he said. "I've been saying that this company clearly needs to sort out the problems there are at News International, at the 'News of the World'."
The inquiry will be able to summon newspaper proprietors, journalists, police and politicians to give evidence on oath and in public. It will have the same powers as the High Court to require people to give evidence, though it was not immediately clear how this will affect non-UK nationals such as News Corp chairman Mr Murdoch and his son James, the company's chief executive in Europe.
After flying into London for a public display of support for embattled News International chief executive Rebekah Brooks earlier this week, Mr Murdoch senior will return to mounting pressure on the Murdoch empire in Washington as US senator Jay Rockefeller called for an investigation into whether News Corp's phone hacking activities had violated US laws.
The chairman of the Senate Committee on Commerce, Science and Transportation said: "If there was any hacking of phones belonging to 9/11 victims or other Americans, the consequences will be severe."
Mr Cameron said those found to be responsible for wrongdoing at the 'News of the World' should be barred from future involvement in the media industry.