Murdoch’s News Corp. drops bid for British TV broadcaster

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 Murdoch’s corporate ambitions by a crisis that erupted only 10 days ago with reports that the News of the World tabloid ordered 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 disclosures and developments, culminating in News Corp.’s announcement yesterday.

A company statement quoted Chase Carey, News Corp.’s deputy chairman, president, and chief operating officer, as saying: “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.’’

It was unclear whether the move would mute the outcry against Murdoch’s operations in Britain. Within minutes of News Corp.’s announcement, politicians from the Labor opposition and the Liberal Democrat junior coalition partner said that 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.

Earlier yesterday, Prime Minister David Cameron had sought to distance himself from Murdoch and had urged him to drop the bid for BSkyB, reversing his previous support. The announcement came just before Parliament was set to approve a cross-party call for Murdoch to abandon his desire to take full control of the lucrative broadcaster - a deal regarded as the cornerstone of his strategy for corporate expansion. Cameron said Murdoch executives should “stop the business of mergers and get on with cleaning the stables.’’

The scandal has also convulsed British politicians, media, and police, forcing them to contemplate unheard-of scrutiny of their sometimes close ties. Investigators were pursuing allegations that journalists from Murdoch newspapers may have tried to hack the phones of families of soldiers killed in Iraq and Afghanistan and made illicit payments to corrupt police officers.

The Labor Party leader, Ed Miliband, said the withdrawal of the BSkyB bid was “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 publisher News International to take responsibility.

Nick Clegg, the leader of the Liberal Democrats and the deputy prime minister, 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.’’

In a rancorous session at the weekly encounter in Parliament known as prime minister’s questions, Cameron also came under renewed pressure to explain his relationship with his former director of communications, Andy Coulson, a former editor of News of the World - a top-selling Sunday tabloid at the epicenter of the scandal that the Murdoch family ordered closed last weekend.