LONDON (AP) — in a stunning retreat decreased Rupert Murdoch's News Corp's bid Wednesday to take full control of the British Sky Broadcasting over what the Prime Minister called a political and media "firestorm" over phone hacking at a the media baron's U.K. newspapers.
Murdoch stepped back from potentially makes his biggest, most lucrative acquisitions, to accept that he cannot win the British Government's approval of the takeover because the country's main political parties had united against it.
"It has become apparent that it is too difficult to make progress in this climate," said News Corp Vice-President and Chairman Chase Carey in a brief statement to the London Stock Exchange.
Shares in BSkyB showed 4 percent lower after the announcement, but released as uncertainty about the company's immediate future was lifted, closing 2 percent higher.
Hours earlier, Prime minister David Cameron announced he was putting a higher judge in charge of an inquiry phone hacking and alleged police bribery by one of Murdoch's British tabloids, the News of the World. The British leader also promised to investigate an allegation that reporter U.K. can have searched phone number of the 9/11 terror victims in a quest for sensational scoops.
"It is a firestorm, if you like, the uppslukar parts of the media, part of the police, and even our political system's ability to respond," said Cameron in the House of Commons. He said must now focus on the victims — police say they will contact over 3 700 people in probe – and ensure that those responsible are prosecuted.
It is a bitter irony of Murdoch that News of the World, his first British acquisitions 1969, sabotaged his ambitions to control the country's most profitable broadcaster.
The Media baron had to close down the 168-year-old muckraking tabloid Sunday and flew to London in a desperate scramble to keep the BSkyB bid alive. Murdoch had hoped to gain control of the 61% of BSkyB shares his News Corp does not already own.
"Thought it was incomprehensible that Mr. Murdoch could continue its takeover after these revelations," said Labour leader Ed Miliband.
Anger has grown and Murdoch's News Corp. 's share price has fallen since a report last week that News of the World had hacked into the phone murders victim Milly Dowler teenage 2002 and may have hindered the police investigation into her disappearance. Followed by data on intrusions into private records of Murdoch's other U.K. papers, the Sun and The Sunday Times.
Police have arrested eight people so far in their investigation, including Cameron's former Communications Director Andy Coulson, former editor of the News of the World. No one has been charged.
Lawmakers held an hour long debate on the scandal Wednesday who had been on the end of a vote on a motion to declare that Murdoch's bid for full control of BSkyB would not be in the national interest. All three main parties had pledged to back the parking card proposal.
The debate went ahead after Murdoch withdrew its bid, but it was unclear whether lawmakers would still vote.
Miliband told legislators that the scrapping of the BSkyB bid was "a victory for the people – United Kingdom upset of betrayal of trust of parts of our newspaper industry good, decent people."
"Make mistakes – the decisions taken by News Corp. was not the decision that they wanted to do," he said.
The scandal cost another media executives their jobs Wednesday. News International, the British unit of News Corp., said the legal Director, Tom Crone, left the company. Crone had led an internal investigation that concluded only two people at the News of the World had been involved in phone hacking of celebrities, politicians, top athletes and murder victims – a stance that collapsed as many revelations came out this year.
Dowlers family met Cameron at 10 Downing Street on Wednesday. Mark Lewis, a lawyer for the family, said they were happy that politicians responded "so quickly in response to public outrage."
Cameron was appointed Lord Justice Brian Leveson to lead the inquiry, which will be able to force witnesses – including Government numbers — to testify under oath.
Leveson will first examine the culture, practices and ethics in the press, its relationship to the police and the failure of the current system of self-regulation. This inquiry is expected to last up to one year. Only then will the investigation focus changed to what went wrong at the news of the world, and other documents, Cameron said.
The judge said some aspects of his work would have to wait until criminal investigation is complete.
"The press gives a fundamental control of all aspects of public life. That is why each error in the media affects us all, "said Leveson. "The focus of this study, therefore may be a simple question: who guards the guardians?"
The proposal that the 9/11 victims may have been directed appeared Monday in the mirror, a British competitor to Sun. It quoted an anonymous source as saying an unidentified American investigators had rejected approaches from unidentified journalists showed a particular interest in British victims of terror attacks. There is no evidence that any phone actually had been hacked.
Washington urged older Jay Rockefeller, a Democrat from West Virginia, an investigation into whether Murdoch's News Corp. had violated u.s. law due to the British paper activities.
If there was no hacking of telephones belonging to 9/11 victims or other Americans, "the consequences are serious," said Rockefeller, Chairman of the Senate Committee on Commerce, science and transportation.
A report Wednesday in The Wall Street Journal, which is part of News Corp., said Murdoch has met with advisers over the last few weeks to discuss the possible options, including the sale of its remaining British newspapers--the Sun, The Times and The Sunday Times. The journal can evaluate unidentified people familiar with the situation, said there appears to be no buyers in view of the newspaper division bad economics.
A defiant mood was still clear at a News International paper, the Sun tabloid, who slapped the heading "Brown errors" on its front page Wednesday in response to claims by former Prime minister Gordon Brown that the paper had received confidential medical records of his younger son.
Brown accused Murdoch's papers, including the Sun and The Sunday Times, in order to have their confidential bank accounts, tax records and health information on his son, Fraser, suffering from cystic fibrosis, using fraudulent means criminal. But the newspaper insisted it learned of the boy's pain from the father of another child with the same conditions, and that it contacted the Browns, who have agreed to that history.
"We are not aware of Mr. Brown, or any of his colleagues as we talked, making any complaints about it on time," Sun said.
Police in the United Kingdom is conducting two studies of News International, a phone hacking and the other on allegations that News of the World bribed police information.
Hugh Orde, President of the Association of Chief Police officers, called News International will clean of any payments.
"If they have names, dates, times, locations, payments to officers, we would like to see them so that we can lock these officers and throw away the key," Orde told the British Broadcasting radio.
Police officials have specified bribery investigations involving about half a dozen officers.
London Mayor Boris Johnson said Wednesday that he had been told that his phone had been chopped but he decided not to take legal action.
"Why on earth should I go through some legal cases where it would have inevitably involved go through all the pathetic so-called revelations as News of the World had dug up?" Johnson said.
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