News Corp. has decided to drop its bid to acquire satellite company British Sky Broadcasting, the media conglomerate announced today.
The news came during a marathon discussion in Britain's House of Commons on the subject of whether Rupert Murdoch’s company should be allowed to move forward with the bid in light of the News of the World hacking scandal. All three major parties in Parliament were poised to vote against the takeover later this afternoon. Murdoch had been scrambling to save the deal as it crumbled under the weight of the hacking allegations, but public pressure finally proved too much.
As Britain’s lawmakers debated the deal, News Corp. issued a statement: “News Corporation ("News Corp") announces that it no longer intends to make an offer for the entire issued and to be issued share capital of British Sky Broadcasting Group PLC ("BSkyB") not already owned by it.”
Chase Carey, deputy chairman and COO, commented, “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 Corporation remains a committed long-term shareholder in BSkyB. We are proud of the success it has achieved and our contribution to it.”
News Corp. will keep its 39 percent share in BSkyB, but will have to pay BSkyB a break fee of around £38.5 million for walking away from the deal. As the news broke, BSkyB's share price dropped by 2 percent.
“This is 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,” Labour leader Ed Miliband said in a statement. “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.”