Written by: FFT Webmaster | July 14th, 2011
Rupert Murdoch, the media magnate with a newspaper, television and new media empire in North America, Europe and his native Australia, is not a man accustomed to being told that he cannot have what he wants. However, in light of the scandal that has gripped his newspapers in the past few months, his News Corporation has announced that it has dropped its bid for control of UK satellite television network BSkyB.
“It has become clear that it is too difficult to progress in this climate,” Chase Carey, News Corporation’s Chief Operating Officer, said in an e-mailed statement. This is a major blow to the company which stood to reap billions of dollars in profits from a majority ownership of the satellite channel, one of the biggest in the UK and most prominent in Europe. Ironically, the scandal that has rocked the newspaper publishing part of the company (clearly the least profitable) has undone the potential profits of its most lucrative investment sector.
The announcement came just hours before Prime Minister David Cameron was expected to join Parliament to vote for a measure calling on News Corporation to drop its $12 billion bid for control of the satellite broadcasting company. Cameron, who has been attempting to distance himself from the scandal, was to meet with the family of 13-year-old murder victim Milly Dowler, whose phone was hacked by News Corporation’s tabloid flagship News of the World, which has since closed down.
While the phone hacking scandal has so far been contained to the UK newspapers (with links to Scotland Yard and to the office of the Prime Minister himself), Murdoch may face intensive scrutiny in the United States, where his holdings including Twentieth Century Fox, Fox News Channel, the Fox Broadcast Network, the Wall Street Journal and the New York Daily News. On Tuesday, Senator Jay Rockefeller, the Democratic chair of the Senate Commerce, Science and Transportation Committee, has called for a U.S. investigation to see if any Americans phones were hacked. He promised “the consequences will be severe” if the phone hacking extended to the United States. Ironically, stocks for News Corporation were up yesterday by almost 10% as news of the BSkyB bid’s demise became public.