News Corp. pulls plug on BSkyB deal

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News Corp. has backed off of its plan to buy BSkyB, the powerful British satellite broadcasting company in which it holds a minority stake.

The decision comes in the wake of a phone hacking scandal that has already led the Rupert Murdoch-owned media giant to shut down its British tabloid News of the World. The paper was closed after accusations that it not only had hacked into the voicemails of celebrities and members of the Royal Family, but victims of crime and terrorism as well.

News Corp. had hoped to salvage its $12-billion purchase of the 60% of BSkyB it didn’t already own, but the increased scrutiny on the company’s operations and news gathering practices and the implications that this was more than a rogue reporter or editor made the purchase politically unfeasible.

‘We believed that the proposed acquisition of BSkyB by News Corp. would benefit both companies but it has become clear that it is too difficult to progress in this climate,’ said News Corp. Deputy Chairman and Chief Operating Officer Chase Carey.

Not only has News Corp.’s image suffered a black eye in the wake of the News of the World debacle, investors have been fleeing the company as well. On Tuesday, News Corp. announced plans to increase a stock buyback program to $5 billion to try to boost its tumbling share price.

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-- Joe Flint