News Drops BSkyB Bid - Multichannel

News Drops BSkyB Bid

Author:
Publish date:

News Corp. said Wednesday that it has dropped it bid to acquire the interest it doesn't already own in U.K. satellite TV giant British Sky Broadcasting, amid a wave of controversy over practices at some of its British newspapers.
"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. chief operating officer Chase Carey said 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."
The moves come in the wake of mounting pressure from regulators and shareholders stemming from the phone hacking scandal at News Corp.'s News of the World newspaper, were reporters at the paper illegally tapped into voice mail and phone records of celebrities, government officials, members of Britain's royal family and private citizens over a period of several years. The 168-year-old tabloid published its final issue on July 10, in what many observers have called an effort to appease government leaders in order to get the BSkyB deal approved. But as new revelations continue to emerge from the scandal - the latest is that the tabloid offered to pay a New York City police officer to retrieve phone records of victims of the Sept. 11, 2001 terrorist attacks in New York - chances that the deal passes muster are growing increasingly dim.
The decision to drop its bid for full control of the satellite TV giant comes just days after News Corp. appeared to try to salvage the bid by agreeing to a review by Britain's Competition Commission. While that would have added about six months to the process, some observers believed it would buy the company time for the phone hacking scandal to lose some steam.
News Corp. already owns about 39% of BSkyB, which is the largest satellite TV operator in Britain with about 10.1 million subscribers. It had launched its bid for 100% control of the company in June 2010, initially proposing to pay about $11.5 billion.
News Corp. shares, which have lost about 13% of their value in the past five days, were up slightly (6 cents per share of 0.4%) in early trading Wednesday to $16.14 per share.

Related