PhoneGate Forces News Corp. to Pull Plug on BSkyB Deal
News Corp.’s BSkyB deal, which has looked increasingly doubtful in the last few days, is now officially dead: The media conglomerate has pulled the plug on its proposed $12.5 billion acquisition of the satellite TV company.
“It has become clear that it is too difficult to progress in this climate,” News Corp. COO Chase Carey said in a statement, referring to the ever-widening PhoneGate scandal that has already forced the company to shut down its News of the World tabloid.
The paper’s closure was a huge news event in Britain, but the BSkyB deal, which would have seen News Corp. buy the 61 percent of the company it didn’t already own, would have been much more meaningful for Rupert Murdoch’s company.
It’s unlikely that this is the last shoe to drop at News Corp. (which also owns this Web site). Murdoch, his son James and News Corp. executive Rebekah Brooks are all scheduled to appear in front of the British Parliament next week to answer questions about the scandal.
Meanwhile, News Corp. has discussed selling off or spinning out its News International unit, which runs its remaining British papers.
And preliminary reports indicate that a scheduled debate about the News Corp. BSkyB deal will still take place today in the House of Commons.
Yesterday News Corp. announced a $5 billion stock buyback program, designed to allay investor fears. But it didn’t do much good, as shares drooped from $16.25 to $15.48. For now, it seems, investors are happier that News Corp. has moved on from BSkyB, and are pushing shares back a few cents toward the $16 mark.