February 29, 2024

In Retreat, Murdoch Drops TV Takeover

The withdrawal from the bid for complete control of British Sky Broadcasting, also known as BSkyB, represented the most severe damage inflicted so far on Mr. Murdoch’s corporate ambitions by the scandal. Only a week ago, Mr. Murdoch hoped to contain the damage by shutting down his 168-year-old tabloid, The News of the World, which had admitted to ordering the hacking of the voice mail of Milly Dowler, a 13-year-old girl abducted and murdered in 2002.

Since then, virtually every day has brought dizzying new disclosure and developments, culminating in News Corporation’s announcement on Wednesday.

In a statement, Chase Carey, the company’s deputy chairman, president and chief operating officer, said, “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.”

As the announcement was made, Prime Minister David Cameron was meeting with Milly Dowler’s parents at 10 Downing Street.

After the meeting, the Dowlers’ lawyer, Mark Lewis, spoke for them to a media throng on the street outside. He said that after what had been “an earth shattering week for everybody,” the family was pleased with the withdrawal of the BSkyB takeover bid because it demonstrated that “however big an organization is,” it could be held to account in a society under law.

It was unclear whether the withdrawal would mute the outcry against Mr. Murdoch’s operations in Britain. Within minutes of News Corporation’s announcement, politicians from the Labour opposition and the Liberal Democrat junior coalition partner said competition authorities should investigate whether to challenge the Murdoch family’s existing 39 percent stake in BSkyB.

Ofcom, the media regulator, said it would continue its scrutiny of BSkyB’s ownership structure.

According to British law, News Corporation would be allowed to make another bid for the BSkyB shares it does not already own in six months. Some analysts said another bid is indeed likely, but that the company would probably have to wait until all investigations into the phone hacking and bribery allegations were completed, a process that is expected to take far longer than six months.

As the announcement was made, the chief lawyer for News International, the British subsidiary of the News Corporation, confirmed reports that he was quitting after 26 years with the company. Officials at the firm said that the lawyer, Tom Crone, had been chiefly responsible for clearing controversial stories published in The News of the World and another paper in the Murdoch stable, The Sun. His resignation made him the first senior executive of News International to quit in the scandal.

In Washington, Senator Jay D. Rockefeller IV, a West Virginia Democrat and the chairman of the Senate Commerce Committee, said he had asked officials to investigate whether any News Corporation entities in the United States had employed illegal methods in their news gathering operations.

The Daily Mirror newspaper had reported that journalists had sought to secure phone data concerning Sept. 11 victims from a private investigator in the United States.

“The reported hacking by News Corporation newspapers against a range of individuals — including children — is offensive and a serious breach of journalistic ethics,” he said in a statement. “This raises serious questions about whether the company has broken U.S. law.

The senator voiced particular concern for the victims of the 9/11 attacks and their families. If the phone hacking did extend to them, he said, “the consequences will be severe.”

Only hours before News Corporation’s announcement, Mr. Cameron made what amounted with his final break with Mr. Murdoch by joining in the common front in Parliament in urging him to drop the bid for BSkyB, reversing his previous support. The announcement came just before Parliament was set to approve the cross-party call for Mr. Murdoch to abandon his long-cherished desire to take full control of the lucrative satellite broadcaster — a deal regarded as the cornerstone of his strategy for corporate expansion.

Mr. Cameron said Murdoch executives should “stop the business of mergers and get on with cleaning the stables.”

John F. Burns reported from London, and Alan Cowell from Paris. Reporting was contributed by Ravi Somaiya and Julia Werdigier from London.

Article source: http://www.nytimes.com/2011/07/14/world/europe/14hacking.html?partner=rss&emc=rss

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