Rupert Murdoch Withdraws Bid For Sky Broadcasting, Will Be Investigated For Spying On 9/11 Victims

In a major blow to News Corp., Rupert Murdoch has abandoned efforts to acquire British Sky Broadcasting, admitting that the fallout from the metastasizing phone hacking scandal has made the bid politically impossible. On another front in the fast-moving scandal, British Prime Minister David Cameron has promised a thorough inquiry into allegations Murdoch's employees attempted to bribe a New York City police officer in order to obtain information on victims of the 9/11 attacks.

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  A demonstrator from Avaaz, a global campaigning group, wearing a Rupert Murdoch head, hold banners in front of Parliament in London, Wednesday, July 13, 2011. LONDON (AP)--In a stunning retreat, Rupert Murdoch's News Corp. media empire dropped its bid Wednesday to take over full control of British Sky Broadcasting amid a political and legal firestorm over phone hacking at one of its British newspapers. Meanwhile, the scandal reached the shores of the United States as a West Virginia Senator promised U.S. criminal charges if it is proven Murdoch's reporters spied on 9/11 victims. The developments come a day after former British Prime Minister Gordon Brown accused News International of spying on his family to obtain information on his sick child.  Murdoch was forced to step back from the biggest battle of his career over a lucrative prize, accepting that he could not win government acceptance of the takeover as Britain's major political parties had united against it. "It has become clear that it is too difficult to progress in this climate," News Corp. deputy chairman and president Chase Carey said in a brief statement to the London Stock Exchange. Shares in BSkyB dived 4 percent lower after the announcement.

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  British Prime Minister David Cameron leaves No.10 Downing Street for Prime Minister's Questions at the House of Commons in London, Wednesday, July 13, 2011. Hours earlier, Prime Minister David Cameron announced he was putting a senior judge in charge of an inquiry into phone hacking and alleged bribery by a tabloid newspaper, and vowed to investigate an allegation that a U.K. reporter may have sought the phone numbers of 9/11 victims in a quest for sensational scoops. "There is a firestorm, if you like, that is engulfing parts of the media, parts of the police, and indeed our political system's ability to respond," Cameron said in the House of Commons. He said the focus must now be on the victims, and make sure that the guilty are prosecuted. The hacking and police bribery scandal also claimed another victim. News International, the British unit of News Corp., said its legal director, Tom Crone, had left the company. Crone had led an internal inquiry that concluded only two people at the News of the World tabloid had been involved in phone hacking--a stance that collapsed as numerous revelations tumbled out this year.

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  Britain's then Chancellor of the Exchequer Gordon Brown and wife Sarah pose with their son, James Fraser, outside Edinburgh Royal Infirmary, in Edinburgh, Scotland, shortly after he was born, in this July 21, 2006 file photo. Brown has accused Rupert Murdoch's newspapers of employing criminals to obtain confidential information about his family, his private financial affairs and the lives of ordinary people who were at "rock bottom." Brown's furious denunciation of the politically powerful News International papers came a day after questions were raised about how The Sun newspaper obtained confidential information in 2006 that Brown's infant son Fraser had cystic fibrosis. "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," said Labour Party leader Ed Miliband, who had mobilized an all-party agreement to vote on a motion urging Murdoch to back off. "People thought it was beyond belief that Mr. Murdoch could continue with his takeover after these revelations," Miliband said. 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. Dowler's family was meeting with Cameron at 10 Downing Street later Wednesday. Police have arrested eight people so far in their investigation, including Cameron's former communications director Andy Coulson, a former editor of News of the World. No one has been charged

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  Chairman of News Corporation Rupert Murdoch, left, and Chief executive of News International Rebekah Brooks as they leave his residence in central London, Sunday, July 10, 2011. Cameron appointed Lord Justice Brian Leveson to lead the inquiry, which will be able to compel witnesses--including government figures--to give evidence under oath. Leveson will first investigate the culture, practices and ethics of the press, its relationship with police and the failure of the current system of self-regulation. That inquiry is expected to last up to one year. Only then will the inquiry focus shift to what went wrong at the News of the World and other papers, Cameron said. The suggestion that 9/11 victims may have been targeted surfaced Monday in the Mirror, a British competitor of The Sun. It quoted an anonymous source as saying an unidentified American investigator had rejected approaches from unidentified journalists who showed a particular interest in British victims of the terror attacks. It cited no evidence that any phone had actually been hacked. In Washington, Sen. Jay Rockefeller, a Democrat from West Virginia, urged an investigation into whether Murdoch's News Corp. had violated U.S. law because of the British paper's activities. If there was any hacking of phones belonging to 9/11 victims or other Americans, "the consequences will be severe," said Rockefeller, chairman of the Senate Committee on Commerce, Science and Transportation. Murdoch had hoped to gain control of the 61 percent of BSkyB shares that his News Corp. doesn't yet own, but the bid was delayed for several months even before he withdrew while the British government's Competition Commission reviewed monopoly concerns.