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Homepage / MEDIA

News Corp. Drops Bid to Buy British Broadcaster as Senator Calls for Investigation

News Corporation Chairman and CEO Rupert Murdoch's London-based newspaper News of the World closed on Sunday after numerous reports surfaced that employees of the paper had hacked phones and voice mails of citizens in the news.(JIM WATSON/AFP/Getty Images)

July 12, 2011

At the center of a firestorm over alleged phone-hacking, Rupert Murdoch’s News Corporation announced Wednesday that it is dropping its bid to buy the share of Britain’s primary satellite TV broadcaster that it does not already own. The dropped bid comes a day after a U.S. Senator encouraged officials to look into whether the scandal affected any Americans.

News Corp.'s stock has been hammered by the widening scandal, shaving billions of dollars off of the company’s market capitalization. Shares in the company have plummeted from $18.13 per share right before the first reports of the phone hacking and potential bribery surfaced to $15.55 so far today, a decline of more than 14%.  The drop has cut the company’s market valuation by more than $9 billion, and many analysts expect its stock to drop further in the coming days because of how important the purchase of British Sky Broadcasting Group, which News Corp. abandoned Wednesday morning, had been to its overall business strategy.

“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,” Chase Carey, News Corp.’s deputy chairman, 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 development comes one day after the scandal reached Congress: In a statement issued on Tuesday, Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., encouraged U.S. agencies with jurisdiction to ensure that no Americans had their privacy breached.

"The reported hacking by News Corporation newspapers against a range of individuals—including children—is offensive and a serious breach of journalistic ethics," Rockefeller said.

Murdoch's London-based newspaper News of the World closed on Sunday after numerous reports surfaced that employees of the paper had allegedly hacked the phones and voice mails of a murdered British teenager and of families of soldiers killed in action. Another report alleged that staffers contacted a New York City police officer about hacking 9/11 victims' phones. The ongoing scandal has already led to a handful of arrests. 

"I am concerned that the admitted phone hacking in London by the News Corp. may have extended to 9/11 victims or other Americans," Rockefeller said. "If they did, the consequences will be severe."

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