13 Jul 2011

Murdoch under pressure to withdraw BSkyB bid

3:13 pm on 13 July 2011

Media tycoon Rupert Murdoch is coming under unprecedented pressure to withdraw his bid for full ownership of satellite broadcaster BSkyB.

The British government says it will back a parliamentary motion by the opposition Labour Party calling on Mr Murdoch's News Corp to drop the $US14 billion bid for the 61% it does not already own in BSkyB.

The move is in response to the scandal over phone-hacking by journalists which led to the closure of the best-selling tabloid News of the World last week.

Accusations have been made that journalists hacked into the phones of a teenage murder victim, the families of soldiers killed in Iraq and Afghanistan and relatives of victims of the 2005 London bombings.

News Corp to buy back shares

In an effort to halt a slide in its share price, News Corp unexpectedly announced on Tuesday it will buy back $US3.2 billion of its own stock in the United States.

The company's share price has dropped more than 14% since the US markets began reacting to the phone hacking scandal, the BBC reports.

Investors initially welcomed the move, and News Corp's shares increased in value.

But once the British government announced it would support blocking the BSkyB bid, the shares lost gains they had made in the morning.

Murdoch called before MPs

Rupert Murdoch, his son James and Rebekah Brooks, the News International executive and former editor at the centre of the storm, were summoned to answer questions next week by a parliamentary committee

On Tuesday, the MPs grilled senior Metropolitan Police chiefs on failures in earlier inquiries into the affair.

Assistant Commissioner John Yates, who in 2009 rejected claims of much wider phone hacking and concluded there was not enough evidence to merit further inquiries, told the committee that he believed he himself had been a victim of hacking.

However, he denied a suggestion that fear that this might lead to damaging stories about him in the press had influenced his decision to block a renewal of the investigations, Reuters reports.