News Corp. today said it was walking away from its effort to buy total control of British Sky Broadcasting Group, which had come under increasing attack from British politicians amid the burgeoning hacking and police bribery scandal.
The move seemed like an effort to prevent current hostility toward News Corp., which already shut down the 168-year-old News of the World over the crisis, from poisoning any potential to get the rest of BSkyB down the road. News Corp. already owns 39.9% of the satellite TV company.
"We believed that the proposed acquisition of BSkyB by News Corp. would benefit both companies but it has become clear that it is too difficult to progress in this climate," Chase Carey, deputy chairman, president and chief operating officer at News Corp., said in a statement announcing the decision. "News Corp. remains a committed long-term shareholder in BSkyB. We are proud of the success it has achieved and our contribution to it."
Mr. Carey's leading role in the announcement lends weight to predictions that his importance at the company would grow as the scandal taints News Corp. Chairman-CEO Rupert Murdoch and his son James, deputy chief operating officer at News Corp. and chairman at News International.
The Murdochs and News International CEO Rebekah Brooks, who was editor at News of the World during the hacking, have been summoned before U.K. lawmakers to answer questions about the company's payments to police.
One analyst, however, said he hoped the setback would force News Corp. to finally rethink its newspaper holdings. "Perhaps this rebuke will force News Corp. to reconsider its ownership of U.K. newspapers," the analyst, Nomura's Michael Nathanson, said in a research note reiterating his continued "buy" rating on News Corp. shares. "We hope this is a turning point for the company's strategy and asset allocation as the ownership of highly inconsequential newspaper assets has forced the dropping of a strategically important asset."