Murdoch throws in the towel over BSkyB bid

The media company announced it was pulling out of its proposed buy-out of the satellite broadcaster after the Prime Minister joined calls last night for it to drop the plans.

News Corporation, which owns the Sun and the Times as well as a 39% shareholding in BSkyB, said it had become clear it was “too difficult” to proceed with the takeover bid in the current climate.

Labour leader Ed Miliband said: “This is a victory for people up and down this country who have been appalled by the revelations of the phone hacking scandal and the failure of News International to take responsibility.

“People thought it was beyond belief that Mr Murdoch could continue with his takeover after these revelations.

“It is these people who won this victory. They told Mr Murdoch: ‘This far and no further’.

“Nobody should exercise power in this country without responsibility.”

A Downing Street spokesman said: “We welcome the news. As the Prime Minister has said, the business should focus on clearing up the mess and getting its own house in order.”

Mr Cameron today named Lord Justice Leveson - the barrister who prosecuted Rosemary West, Britain’s worst serial killer - as the chairman of the hacking inquiry.

It will look into the ethics and culture of the British media as well as the specific claims about phone hacking at the News of the World, the shortcomings of the initial police inquiry, and allegations of illicit payments to police by the press.

The single inquiry, which replaces Mr Cameron’s previous proposal for two separate investigations, will have powers to summon newspaper proprietors, journalists, police and politicians to give evidence under oath and in public.

In fiery exchanges at Prime Minister’s Questions, Mr Cameron said that his former head of communications Andy Coulson should be prosecuted if it is proved that he lied when he claimed to know nothing about phone hacking at the News of the World while he was editor.

Meanwhile, it was announced that News International’s long-serving legal manager Tom Crone has left the company. Mr Crone was responsible for advising the News of the World and the Sun on editorial matters before and after publication.

A Metropolitan Police team led by Deputy Assistant Commissioner Sue Akers has made eight arrests and is looking through 11,000 pages of documents seized from private investigator Glenn Mulcaire in 2005 and has identified 3,870 names, and around 4,000 mobile and 5,000 landline phone numbers.

Mr Cameron called for “root and branch change” at News International and said those responsible for the “disgraceful” hacking into private phone calls should be prosecuted.

And he made clear that this could include Mr Coulson, telling MPs he had been appointed Downing Street’s director of communications on the basis of “assurances he gave me that he did not know about the phone hacking, he was not involved in criminality”.

“He gave those self-same assurances to the police, to a select committee of this House and under oath to a court of law,” said Mr Cameron.

“If it turns out he lied, it won’t just be that he shouldn’t have been in government, it will be that he should be prosecuted.”

Mr Miliband again said former News of the World editor Rebekah Brooks should be removed from her current position as News International chief executive.

He branded her continued employment by the company an “insult” to the family of murdered schoolgirl Milly Dowler, whose phone was allegedly hacked after she went missing in 2002.

Mr Murdoch’s BSkyB bid was referred to the Competition Commission earlier this week by Culture Secretary Jeremy Hunt, who will make the eventual decision on whether the bid should go ahead in a quasi-judicial capacity.

Mr Cameron told the Commons: “In my view, this business should not be focused on mergers and takeovers, but on clearing up the mess and getting their house in order.

“The people involved - whether they were directly responsible for the wrongdoing, sanctioned it, or covered it up, however high or low they go - must not only be brought to justice, they must also have no future role in the running of a media company in our country.”

The Prime Minister met the Dowler family this afternoon to discuss the allegations that 13-year-old Milly’s mobile phone was hacked by the News of the World, and voicemail messages were deleted, while police were hunting for her following her abduction.

Mr Cameron said: “None of us can imagine what they have gone through.

“But I do know this: They, like everyone else in this country, want their politicians - all of us - to bring this ugly chapter to a close and ensure that nothing like it can ever happen again.”

Questioned about Mr Coulson during Prime Minister’s Questions, Mr Cameron said his private office did not pass on concerns about the former tabloid editor raised by the Guardian newspaper at the time of his Downing Street appointment.

Guardian editor Alan Rusbridger has said he warned Mr Cameron’s office about Mr Coulson’s links with private investigator Jonathan Rees, who was then a suspect in a murder investigation for which he was later acquitted.

But Mr Cameron said today the warning did not contain any new information.

“This was not some secret stash of information - almost all of it was published in the Guardian in February 2010 at the same time my office was approached,” he said.

“It contained no allegations directly linking Andy Coulson to illegal behaviour, it didn’t shed any further light on the issue of phone-hacking, so it wasn’t drawn to my attention by my office.”

Deputy Prime Minister Nick Clegg said: “This is the decent and sensible thing to do.

“Now that the bid has been called off and a proper inquiry set up, we have a once-in-a-generation chance to clean up the murky underworld and the corrupted relationship between the police, politics and the press.”

Labour MP Tom Watson, who has been at the forefront of demands for action over phone-hacking, said that the decision to drop the BSkyB bid was not enough to draw a line under the scandal.

Mr Watson - a member of the Commons Culture Committee which has called Rupert Murdoch to give evidence next week - told Sky News: “The nation is getting angrier and angrier about this, because the real issue is that there is no corporate humility from News International.

“We have still not seen anyone at the top take responsibility for creating a culture in a newsroom that would allow a journalist to target the phone of an abducted 13-year-old girl.

“Unless somebody carries the can and somebody apologises at the top of that company, I think this is just going to run on and on.”

The chairman of the Commons Culture, Media and Sport Committee John Whittingdale said it was “undoubtedly the right decision” for News Corp to drop its BSkyB bid.

Mr Whittingdale told Sky News: “I think it was absolutely inevitable that News Corporation would have to pull out of the bid for the rest of BSkyB.

“Not only had all three party leaders called for them to do so, it was pretty clear that the House of Commons was going to vote unanimously that they should do so.

“The scope and strength of public feeling was so great that it made it utterly impossible for them to continue.

“It is undoubtedly the right decision. I think it has been clear for several days that this couldn’t continue and the public simply wouldn’t tolerate it.”

Mr Whittingdale said that he expected it to be a matter of years before Lord Leveson’s inquiry is completed.

Lord Prescott said that recent events raised questions over News Corporation’s ownership of newspapers The Sun, The Times and the Sunday Times and 39% of BSkyB.

The former DPM told the BBC: “What is at the heart here, which they seem to have recognised, is that the public in this country are not prepared to tolerate them as fit and proper people to be controlling major parts of our media.”

Lord Leveson said work on the practical arrangements for the inquiry would begin “immediately” so that the first part could begin “as soon as possible”. He hoped to be able to provide an update by the end of the month.

The terms of reference for the inquiry raised “complex and wide-ranging legal and ethical issues of enormous public concern”, he said in a statement.

“The Inquiry must balance the desire for a robustly free press with the rights of the individual while, at the same time, ensuring that critical relationships between the press, Parliament, the Government and the police are maintained,” he said in a statement.

“The press provides an essential check on all aspects of public life. That is why any failure within the media affects all of us. At the heart of this Inquiry, therefore, may be one simple question: who guards the guardians?”

Liberal Democrat deputy leader Simon Hughes said: “Three days ago the most popular Murdoch title disappeared - ruined by the excesses of some of its staff. Today the News International bid for BSkyB has been withdrawn.

“At last the sun is setting on Rupert Murdoch’s British empire.

“Journalism in the UK used to have the reputation as the best in the world. It is in the interests of all the public that this reputation is now restored.”