News Corp. pulls BSkyB bid

News Corp. has abandoned its £8 billion bid to take full control of British Sky Broadcasting (BSkyB).

The move the brink of a speech to Parliament in which UK Prime Minister David Cameron called on the company to withdraw its bid and focus on cleaning up its phone hacking mess.

It was perhaps the ultimate expression of the adage "a week is a long time in politics" as MPs who once courted and feared Rupert Murdoch fell over themselves to take shots at his company.

News Corp, which had more than $US7 billion wiped from its market cap between the July 8 closure of News of the World and today's announcement, bounced back on the news. The company's stock (NYSE: NWS) was up 2.36% in late trading..

Cameron announced two inquiries
But there could be more political trouble ahead.

Mr Camerson - described by media as "rattled" - announced a two-part inquiry to be led by one of the UK's most senior judges, Lord Justice Brian Leveson.

The first will look at media culture, practices, ethics and the press's relationship with the police and politicians. Perhaps ominously for News Corp, it will also look at cross-media ownership.

The second will investigate allegations of illegal practices at News Corp.'s now-shuttered News of the World tabloid and at other newspapers, along with alleged payments made by the media to police.

A series of police investigaions are also underway, including one into former News of the World editor Andy Coulson, who earlier this year resigned as Mr Cameron's director of communications.

Retaining minority stake
In a statement, News Corp COO Chase Carey said his company would remain a minority shareholder in BSkyB but "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. had been seeking to buy the 60.9% of BSkyB that it does not already own.

The collapse of the deal is a blow to James Murdoch, the fourth of Rupert Murdoch six children and the assumed successor when his father retires.

Mr Murdoch (38) is third in command at News Corp., and has responsibility for the company's UK businesses.