News Corp withdraws bid for BSkyB

A senior source who had been working on the offer told journalists that the situation had become "too politicised" for News Corp to move forward.

It was later confirmed by the media group, which said the "current climate" prevented a further approach. 

A Downing Street spokesman said: "We welcome the news. As the Prime Minister has said, the business should focus on clearing up the mess and getting its own house in order."

Labour leader Ed Miliband described the decision as "a victory for people up and down this country who have been appalled by the phone hacking scandal".

A statement confirming the move read: " News Corporation announces that it no longer intends to make an offer for the entire issued and to be issued share capital of British Sky Broadcasting Group PLC ("BSkyB") not already owned by it."

News Corp has a 39% stake in BSkyB and had been trying to buy the remaining shares, having tabled a 700p-a-share offer in June last year.

Deputy chairman Chase Carey commented: "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."

News Corp remains a "committed long-term shareholder in BSkyB", he said.

Kleinman noted that by issuing the statement, News Corp would be prohibited from bidding for the part of BSkyB it does not already own for at least six months under the rules that govern takeovers.

He added that the withdrawal was very bad news for hedge funds who had piled into BSkyB shares, hoping for a knockout bid.