LONDON (AFP) ? Media mogul Rupert Murdoch dramatically dropped his bid for control of pay-TV giant BSkyB, bowing to pressure from the British government over the phone-hacking firestorm at his newspaper empire.
Just hours before Britain's political parties backed a parliamentary motion urging Murdoch to abandon his long-cherished takeover, his News Corp. conceded it was now "too difficult to progress in this climate".
The scandal, which forced the closure of the News of the World tabloid on Sunday, also threatened to spread across the world as Australia's prime minister said she was open to an inquiry and key US lawmakers ramped up calls for a US probe into the activities of Murdoch's business.
Australian Prime Minister Julia Gillard said Thursday she would be open to an inquiry into media regulation and ownership after the "disgusting" scandal engulfing News Corporation.
Australia's Greens party has called for a parliamentary review of the nation's media, in which Murdoch is a dominant player, adding to the pressure on his beleaguered global empire.
"I'm not surprised to see that in parliament or amongst parliamentarians a conversation is starting about the need for a review, and I will be happy to sit down with parliamentarians and discuss that review," Gillard said.
"I anticipate that we'll have a discussion amongst parliamentarians about this, about the best review and way of dealing with all of this," she told the National Press Club.
British Prime Minister David Cameron welcomed the news about BSkyB, saying the Australian-born tycoon should focus on cleaning up his business, in particular News International, his British newspaper operation.
"This is the right decision. I've been saying this company clearly needs to sort out the problems there are at News International and the News of the World -- that must be the priority, not takeovers," Cameron said.
After decades as Britain's political kingmaker, Murdoch has seen his empire threatened by a wave of outrage over the tabloid's hacking of voicemails belonging to people including a murdered girl and the families of dead troops.
The 80-year-old Murdoch had pushed for the bid as the broadcaster's portfolio includes live English Premier League football and blockbuster films, and this year reached its target of 10 million household subscribers.
His decision to axe the 168-year-old News of the World, Britain's biggest selling Sunday newspaper and a profitable business, was apparently aimed at shoring up the deal, but it failed.
"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," said News Corp. deputy chairman Chase Carey.
Carey said US-based News Corp., which wanted to purchase the 61 percent of shares in BSkyB it did not own for ?7.8 billion (8.6 billion euros, $12.5 billion), would remain a "committed long-term shareholder" in BSkyB.
News International title The Times on Thursday called the collapse a "costly and strategically damaging blow", adding that the "Sky had fallen in" for its owner.
The Guardian, which has followed the scandal tenaciously since it broke in 2006, celebrated its adversary's "capitulation" and looked forward to a "cleaner, more plural" future for Britain's press.
Ed Miliband, the leader of the main opposition Labour party who had proposed the parliamentary motion urging Murdoch to drop the bid, said it was a "victory for the people".
The scandal has spread out from Murdoch's newspapers to include the police, with some officers allegedly receiving payments from the News of the World, to politicians accused of being too cosy with Murdoch.
The British premier has himself felt the heat as his media chief from 2007-2010 was former News of the World editor Andy Coulson, who was arrested on Thursday over allegations of voice hacking and paying off policemen.
In parliament Wednesday Cameron announced the details of a full public inquiry into phone hacking, which he said would also include links between politicians and the press.
"There is a firestorm that is engulfing parts of the media, parts of the police and indeed parts of the political system," said Cameron.
He said the inquiry would have the power to summon newspaper proprietors, and warned that executives found guilty of wrongdoing could be barred from future roles in British media.
Murdoch, his son James -- the chairman of BSkyB and an executive at News Corp. -- and Rebekah Brooks, chief executive of News International, have been called to give evidence to lawmakers next week.
Brooks will attend Tuesday's meeting of the Culture, Media and Sport select committee, possibly with James Murdoch, but almost certainly without Rupert, Sky News reported.
In Washington, Democratic Senators Jay Rockefeller and Barbara Boxer urged US Attorney General Eric Holder and the Wall Street watchdog Securities and Exchange Commission, to launch investigations into the scandal.
The lawmakers cited allegations that Murdoch's news outlets hacked the phones of September 11 victims, saying in a letter that the claims "indicate a pattern of illegal activity, and involve thousands of potential victims."
News Corp's shares have plummeted in the past week, and the Murdoch-owned Wall Street Journal reported that the media tycoon was considering selling off his remaining British newspapers, The Times, The Sunday Times and The Sun.
Source: http://us.rd.yahoo.com/dailynews/rss/britain/*http%3A//news.yahoo.com/s/afp/20110714/bs_afp/britainmediapolitics
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