Wednesday, July 13, 2011

Sky News claims News Corp. will withdraw its bid for BSkyB; BBC says that News Corp. will retain its 30% ownership stake in the UK satellite TV service

Sky News claims that Rupert Murdoch's News Corp. will withdraw its bid for BSkyB, the British satellite television provider. The U.K. television news channel is displaying a breaking news banner on its website making the claim.

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According to another media outlet, the BBC, News Corp. will keep its current 39 percent share of the company.

The move, while probably inevitable, is nonetheless a shocking development, and an admission that the phone hacking scandal has grown to such a size that it threatens the very existence of Rupert Murdoch's U.K. media empire. It also may be a last attempt to defuse the situation, knowing that News Corp. could decide to pursue BSkyB at a later date, after the situation has cooled down.

Update: News Corp. has now confirmed the news. "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 Corp chairman Chase Carey said in the company's statement.

Meanwhile, BSkyB's share price on the London Stock Exchange is predictably crashing. The BSY price opened today at 692.00, but is currently down 3.54 percent to 667.50. It should be noted, however, that this brings the share price back down to levels seen earlier this year, before the acquisition news began to effect its price.

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