Murdoch Blinks: News Corp. Drops Its Satellite Bid

This has certainly been a disastrous week for Rupert Murdoch. In conjunction with mounting scandal over intrusive tabloid operations, Murdoch’s News Corporation has not only faced a severe beating from the British press, but has also just abandoned an ambitious television takeover. Today, Murdoch’s News Corporation revealed that it will withdraw a $12 billion bid to take over remaining shares of Britain’s main satellite television broadcaster, British Sky Broadcasting (BSkyB).

This development is the latest upheaval to follow News Corp.’s phone hacking fiasco. The latter erupted 10 days ago when reports emerged that the company’s The News of the World tabloid once ordered the hacking of a murdered 13-year-old’s voice mail account in 2002. Since this exposé emerged, nearly every day has brought fresh disclosures and rumors regarding News Corp.’s operations. The continuing scandal, as this latest satellite bid withdrawal demonstrates, has effectively convulsed Murdoch’s British newspaper empire, which has heretofore maintained a snug and remarkably influential relationship with politicians and police across the country.

Recently, allegations against Murdoch’s newspapers have included claims of journalists hacking the family phones of soldiers killed in Afghanistan and Iraq, and soliciting information from police officers by means of bribes. It would seem that Murdoch’s ‘anything goes’ approach to newsroom culture is crumbling before his very eyes. On July 7th, his son James unexpectedly responded to public pressure, announcing that The News of the World would cease publication following its July 11th edition. The following day, Andy Coulson, former communications director to Prime Minister David Cameron, was arrested on suspicion of corruption allegations tied to his role as editor of The News of the World. The publication’s previous editor, Rebekah Brook, who quickly rose to the head of Murdoch’s newspaper empire in Britain, is now also fending off demands for her own arrest.

Revealing of the impact of these scandals, Chase Carey, News Corp’s Deputy Chairman, has stated that the proposed BSkyB acquisition would be “…too difficult to progress in this climate.” Although this apparent retreat was undoubtedly intended to subdue further outcry against News Corp., Carey’s announcement was swiftly followed by calls for greater scrutiny over BSkyB’s ownership makeup. Labour politicians and Liberal Democrats of the government coalition have concurred that authorities should investigate the option of challenging the Murdoch family’s current 39 per cent stake in BSkyB. Prime Minister David Cameron has accordingly sought to distance himself from Murdoch, reversing his previous support for the BSkyB bid and claiming that News Corp. executives should “…stop the business of mergers and get on with cleaning the stables.

Today, Cameron took an even firmer stance against Murdoch’s towering influence on British media sources, announcing the launch of a judicial inquiry into unethical media practices, including phone hacking. Crucially, Cameron has stated that the inquiry will examine why initial police investigations of The News of the World’s operations, which began in 2006, failed to expose the full extent of the scandal. Lord Justice Brian Leveson is set to head this inquiry, which further aims to finalize a report on future regulations of the British press.

According to Nick Clegg, deputy prime minister and leader of the Liberal Democrats, the inquiry represents “…a once-in-a-generation chance to clean up the murky underworld and the corrupted relationship between the police, politics, and the press.” If effective, the inquiry has the potential to change Britain’s media landscape, altering not only regulations on the press, but also guidelines on media ownership. Considering the lack of media plurality within the U.K., largely resulting from Murdoch’s steady acquisition of British newspapers, this inquiry certainly represents a much needed step towards a less monopolized and corrupted media landscape. To his credit, Cameron has acknowledged that “the people involved [in The News of The World scandal]…must have no future role in the running of a media company in our country.”

According to a report by The Financial Times, several changes regarding how journalists interact with politicians will take effect immediately. The government will require all ministers, special advisors, and permanent secretaries to publish the details of their meetings with media executives, and editors. On Tuesday, a parliamentary committee further announced that Murdoch, his son James, and Rebekah Brooks would be called to testify under oath concerning phone hacking and corruption allegations. With ownership of four leading British newspapers, Murdoch’s News Corp. previously stood as a media force to be reckoned with, a corporation that politicians both feared and courted. Now, with a judicial inquiry on the table, the mogul’s empire seems set to crumble. One can only hope this will bring greater transparency to Britain’s media landscape.