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Jul 13 11 8:30 AM
Sceptical Observer
Rupert Murdoch's News Corporation has announced that it is dropping its planned bid to take full ownership of satellite broadcaster BSkyB.
The move came as the House of Commons prepared to vote for a motion supported by all major party leaders calling on Mr Murdoch to scrap the bid.
It follows a scandal over phone hacking at News Corp's UK newspaper group.
News Corp deputy chairman Chase Carey said the bid had become "too difficult to progress in this climate".
The scandal has already led to the closure of the UK's biggest-selling newspaper, the News of the World.
"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," said News Corp deputy chairman and president Chase Carey in a statement.
"News Corporation remains a committed long-term shareholder in BSkyB. We are proud of the success it has achieved and our contribution to it."
BSkyB's share price briefly dropped following the announcement, taking it down 4% for the day, before recovering to close 2% up.
The company's share price has fallen some 20% since peaking at 850p earlier this month, and is now trading at a level not seen since News Corp first announced its bid plans in June last year.
Following News Corp's announcement, BSkyB chief executive Jeremy Darroch said: "We remain very confident in the broadly based growth opportunity for BSkyB."
A spokesman for Mr Cameron welcomed the news: "As the prime minister has said, the business should focus on clearing up the mess and getting its own house in order."
The Labour leader, Ed Miliband, called it "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".
Liberal Democrat deputy leader Simon Hughes said that "the sun is now setting on the Murdoch empire".
The BBC's business editor Robert Peston said: "It's a huge humiliation. This was [News Corp's] biggest investment plan of the moment. It was one of the biggest investments they've ever wanted to make.
"It is an extraordinary reversal of corporate fortune... And questions will now be asked whether this is the full extent of the damage to the empire."
News Corp already owns 39% of BSkyB, but may be compelled to give up even this minority stake if it is deemed not to be a "fit and proper" by regulator Ofcom following the conclusion of current police investigations.
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