News Corp withdraws bid for BSkyB

Rupert Murdoch's News Corporation withdrew its BSkyB takeover bid today as David Cameron announced details of the independent inquiry into phone hacking.

The media company announced it was pulling out of its proposed buy-out of the satellite broadcaster after the Prime Minister joined calls last night for it to drop the plans.

News Corporation, which owns the Sun and the Times as well as a 39% shareholding in BSkyB, said it had become clear it was "too difficult" to proceed with the takeover bid in the current climate.

Labour leader Ed Miliband said: "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.

"People thought it was beyond belief that Mr Murdoch could continue with his takeover after these revelations.

"It is these people who won this victory. They told Mr Murdoch: 'This far and no further'.

"Nobody should exercise power in this country without responsibility."

A Downing Street spokesman said: "We welcome the news. As the Prime Minister has said, the business should focus on clearing up the mess and getting its own house in order."

Deputy Prime Minister Nick Clegg said: "This is the decent and sensible thing to do.

"Now that the bid has been called off and a proper inquiry set up, we have a once-in-a-generation chance to clean up the murky underworld and the corrupted relationship between the police, politics and the press."

BSkyB shares fell another 1% to 683.5p today, having been 850p earlier this month on hopes of a deal with News Corp. They have slumped in recent days amid the hacking scandal and after Culture Secretary Jeremy Hunt referred the proposed bid to the Competition Commission for further investigation.

Pressure on Mr Murdoch intensified yesterday when Prime Minister David Cameron joined all-party demands for the media mogul to drop the bid.

News Corp tabled its 700p-a-share approach for the 61% of BSkyB that it does not currently own in June last year, a move which valued the FTSE 100 Index company at around £12 billion.

Labour MP Tom Watson, who has been at the forefront of demands for action over phone-hacking, said that the decision to drop the BSkyB bid was not enough to draw a line under the scandal.

Mr Watson - a member of the Commons Culture Committee which has called Rupert Murdoch to give evidence next week - told Sky News: "The nation is getting angrier and angrier about this, because the real issue is that there is no corporate humility from News International.

"We have still not seen anyone at the top take responsibility for creating a culture in a newsroom that would allow a journalist to target the phone of an abducted 13-year-old girl.

"Unless somebody carries the can and somebody apologises at the top of that company, I think this is just going to run on and on."

The chairman of the Commons Culture, Media and Sport Committee John Whittingdale said it was "undoubtedly the right decision" for News Corp to drop its BSkyB bid.

Mr Whittingdale told Sky News: "I think it was absolutely inevitable that News Corporation would have to pull out of the bid for the rest of BSkyB.

"Not only had all three party leaders called for them to do so, it was pretty clear that the House of Commons was going to vote unanimously that they should do so.

"The scope and strength of public feeling was so great that it made it utterly impossible for them to continue.

"It is undoubtedly the right decision. I think it has been clear for several days that this couldn't continue and the public simply wouldn't tolerate it."

Mr Whittingdale said that he expected it to be a matter of years before Lord Leveson's inquiry is completed.

Lord Prescott said that recent events raised questions over News Corporation's ownership of newspapers The Sun, The Times and the Sunday Times and 39% of BSkyB.

The former DPM told the BBC: "What is at the heart here, which they seem to have recognised, is that the public in this country are not prepared to tolerate them as fit and proper people to be controlling major parts of our media."

Lord Leveson said work on the practical arrangements for the inquiry would begin "immediately" so that the first part could begin "as soon as possible". He hoped to be able to provide an update by the end of the month.

The terms of reference for the inquiry raised "complex and wide-ranging legal and ethical issues of enormous public concern", he said in a statement.

"The Inquiry must balance the desire for a robustly free press with the rights of the individual while, at the same time, ensuring that critical relationships between the press, Parliament, the Government and the police are maintained," he said in a statement.

"The press provides an essential check on all aspects of public life. That is why any failure within the media affects all of us. At the heart of this Inquiry, therefore, may be one simple question: who guards the guardians?"

Liberal Democrat deputy leader Simon Hughes said: "Three days ago the most popular Murdoch title disappeared - ruined by the excesses of some of its staff. Today the News International bid for BSkyB has been withdrawn.

"At last the sun is setting on Rupert Murdoch's British empire.

"Journalism in the UK used to have the reputation as the best in the world. It is in the interests of all the public that this reputation is now restored."