impact UK phone hacking scandal, stock has fallen : News Corp. (NWS) Wednesday said it was dropping its bid to acquire the 60.9% of British Sky Broadcasting Group PLC (BSY.LN) that it doesn't already own, amid a political firestorm over alleged unethical reporting tactics at some of its British newspapers.
The decision was welcomed by British Prime Minister David Cameron, who just hours earlier had told parliament News Corp "should not be focused on mergers and takeovers, but on clearing up the mess and getting their house in order."
BSkyB's shares fell around 3.5% immediately following the bid withdrawal, but have since recovered and at 1411 GMT were trading down 8 pence, or 0.7%, at 687 pence, valuing the company at GBP12.04 billion, in a slightly higher London market. The stock has fallen around 19% since new phone hacking allegations surfaced on July 5. In New York, News Corp. shares were up 1.6% at $16.34.
BSkyB, the U.K.'s biggest pay-television operator, noted News Corp.'s decision and said "the board believes BSkyB has a compelling investment case and significant growth opportunities, as demonstrated by its excellent operational and financial performance and strong balance sheet which provides both strategic and financial flexibility."
Outrage has grown and Murdoch's News Corp.'s share price has fallen since a report last week that his News of the World tabloid hacked into the phone of teenage murder victim Milly Dowler in 2002 and may have impeded a police investigation into her disappearance. That was followed by claims of intrusion into private records by Murdoch's other U.K. papers, The Sun and The Sunday Times.
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