Murdoch, savaged in parliament, pulls British TV bid

LONDON,  (Reuters) – Rupert Murdoch withdrew his bid  for broadcaster BSkyB yesterday, as outrage over  alleged crimes at his newspapers galvanized a rare united front  in parliament against a man long used to being courted by  Britain’s political elite.

The Australian-born billionaire’s U.S.-based News Corp   , thwarted in a key move to expand its media empire in television, said it would keep its 39 percent of the highly  profitable pay-TV network, but left investors guessing over  whether it might try again to buy up the rest, or even sell up.

The withdrawal removes the most pressing political conflict  the company faced. But a police probe and new public inquiries  into the scandal and into media regulation as a whole may keep  an unflattering spotlight on it and weaken the influence the  80-year-old media magnate has enjoyed in Britain for decades.

“Successive prime ministers have cosied up to Murdoch,” said  politics professor Jonathan Tonge of Liver-pool University.

“Now it’s a new era. Political leaders will be falling over  themselves to avoid close contact with media conglomerates. This  is a turning of the tide. It’s parliament versus Murdoch.”

While there was no clear legal obstacle to letting the bid  proceed via a regulatory review, having won informal government  blessing some time ago, even Murdoch’s dramatic closure of the  scandal-hit News of the World tabloid had failed to stem public  anger, leaving the $12-billion buyout politically untenable.

“With such universal political disapproval it would have  been foolhardy to carry on,” said stock analyst Steve Malcolm at Evolution Securi-ties. “It would be a futile pursuit.”

Conservative Prime Minister David Cameron, under fire over  his own ties to former News of the World journalists, threw his  government’s weight behind an opposition motion on Wednesday that denounced Murdoch’s bid to extend his media power while  police were investigating whether his journalists hacked into  the voicemails of thousands of people in search of stories.

“It has become clear that it is too difficult to progress in  this climate,” News Corp deputy chairman Chase Carey said,  adding that the group, whose top executives have gathered in  London, remained “a committed long-term shareholder” in BSkyB.


Shares in News Corp, also owner of Fox television and the  Wall Street Journal in the United States, had shed 15 percent in  a week on fears of widening damage to its brands and a loss of  opportunity in television. They ended the day up 3.8 percent as  investors welcomed relief from poisonous publicity.

BSkyB closed up around 2 percent.

Shareholders had been concerned by talk from politicians in  the United States and Australia about mounting investigations. In Washington, three senators said on Wednesday that the Justice  Department and securities regulator should investigate whether  News Corp broke laws in the United States over phone hacking.

There have been reports that families of victims of the 9/11  attacks may have been targets of would-be phone hackers.

A Justice Department spokeswoman said they would review the  letters sent by the senators as part of standard practice, but  that did not mean an investigation would be initiated.

For a week, Britain has been in uproar since a major turn in  the long-running saga of phone-hacking by the News of the World.  Rival newspapers published allegations that, far from being  limited to spying on the rich or powerful, the practice extended  to victims of crimes, including child murders and the 2005  London bombings, as well as to parents of Britain’s war dead.

Cameron has been embarrassed by the arrest of his former  spokesman — a former News of the World editor — and has had  little choice but to follow the popular mood against Murdoch and

News International, News Corp’s powerful British newspaper  arm which also owns the best-selling Sun tabloid and London’s  Times.

“This is the right decision,” Cameron said of the withdrawal  of the BSkyB bid. “This company clearly needs to sort out the  problems there are at News International, at the News of the  World. That must be the priority, not takeovers.”

New Labour leader Ed Miliband has, despite his party’s own  long courting of Murdoch, emerged with his hitherto modest  standing somewhat burnished by his stand on the bid. He said:  “This is a victory for people up and down this country who have  been appalled by the revelations of the phone hacking scandal.

“People thought it was beyond belief that Mr Murdoch could  continue with his takeover after these revelations … Nobody  should exercise power in this country without responsibility.”

The show of cross-party unity against Murdoch in parliament  was short-lived, with both Cameron and his Labour predecessor  Gordon Brown having to defend their contacts with the press  baron against raucous questioning from the opposing benches.

Cameron said there had been mistakes all round, leading to a  “firestorm” engulfing parts of the media, police and the  political system. Brown has spoken out with emotion of having  his baby son’s illness revealed by a Murdoch tabloid.


The four-sentence statement from News Corp left the door  open to a new offer to buy out other BSkyB shareholders at some  point.

Chris Marangi, portfolio manager at News Corp shareholder  Gabelli Multimedia Funds said: “This is not surprising, it  doesn’t mean the desire’s not there. It’s politically savvy, and  he needs to buy his time and let this blow over … At the time,  it’s circle the wagons and protect existing operations.”

Several former employees of News International have been  arrested this year after police reopened inquiries which they  had dropped in 2007 following the jailing of the News of the  World’s royal correspondent and a private investigator.

Those under suspicion of phone hacking and of bribing police  include former editor Andy Coulson, whom Cameron hired as his  spokesman in 2007 after the hacking scandal first broke. Coulson  left the prime minister’s office in January and, like other News  of the World staff, denies knowing of any wrongdoing.

In the most senior departure from the organisation since  Coulson, the legal manager of News International, Tom Crone, has  left the company, a source familiar with the matter told  Reuters. He has been closely involved in the company’s defence.

That for years consisted of blaming one “rogue reporter” but  has shifted to accept possibly wider problems.

Murdoch flew in from the United States at the weekend to  take command, alongside his son and heir apparent James and  Rebekah Brooks, the News International chief executive. She was  Coulson’s predecessor at the News of the World at a time when  some of the gravest alleged misdeeds took place.

Giving details to parliament of a formal public inquiry into  the affair, to be chaired by a senior judge, Brian Leveson,  Cameron said that senior executives, however high in the Murdoch  organisation, should be barred for life from the British media  if found to have taken part in any wrongdoing.

Cameron has said Brooks, a frequent guest at his home and a  close confidante of Murdoch, should quit. Many of the 200 staff  sacked from the News of the World have complained that their  jobs were sacrificed in an effort to create a firebreak designed  to stop the scandal hitting Brooks or the Murdoch family.

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