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Murdoch's influence in question, BskyB deal in doubt

British regulators are now set to review Rupert Murdoch's $12 billion bid to takeover major UK satellite company BskyB. For the moment, his influence and financial fortunes are taking a hit.

By Staff writer / July 11, 2011

A Sky sign is pictured at the British Sky Broadcasting headquarters in west London, on March 3.

Warren Allott /AFP

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Just as the purchase of the Sunday tabloid News of the World in 1969 was Rupert Murdoch's first step in transforming himself from a successful Australian newspaper entrepreneur into a global media power, so his farsighted purchase in 1983 of a moribund and loss-making early satellite television station marked the beginning of his shift from being a merely very rich man into a billionaire with media holdings on four continents.

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Now NotW's 168-year run in print is over. Mr. Murdoch and his son James closed the paper on July 10 in an attempt to stop a steamrolling scandal over the paper's bribes to policemen and illegal intercepts of cell phone messages in the past decade. But the fallout continues to accumulate, with unprecedented public attacks on the political influence Murdoch has accrued for himself through his newspapers and cozy relationships with senior British politicians. Now, Murdoch's $12 billion effort to take full control of BskyB – the dominant satellite broadcaster he helped to build – looks indefinitely stalled, if not dead in the water.

Murdoch, who remains one of the world's richest men, arrived in the UK this week to take charge of efforts to stem the scandal, which has spread from the handful of former reporters, editors, and executives at NotW to News International, the News Corporation subsidiary for the company's press holdings in the UK. It's hard to see the UK media landscape being quite the same again.

Opposing Murdoch was once so politically dangerous that few British members of parliament dared. Cementing his power was the shock 1992 election victory of the Conservative Party. The UK was mired in recession and most polls had the Labour Party positioned to end 13 years of Tory dominance. But the Murdoch press, led by his daily tabloid The Sun, waged a fierce and often witty campaign against Labour and the party's then-leader Neil Kinnock. On the morning of the election, The Sun's lead headline asked that if Kinnock wins "Will the Last Person to leave Britain Turn Out the Lights?" The Sun's chest beating headline following the Tory victory, "It's The Sun Wot Won it," passed immediately into British press and political lore.

But now siding with Murdoch is looking like political poison to UK politicians, with the public disgusted to have learned that NotW's methods weren't confined to politicians or wealthy celebrities but extended to victims of terrorist attacks and spying on the cell phone messages of the family members of 13-year-old Millie Dowler.

Nick Clegg, deputy prime minister and leader of the junior partner Liberal Democrats in Prime Minister David Cameron's government, told the BBC that Murdoch should "do the decent thing" and drop his bid for BskyB. "Listening to Bob, Sally, and Gemma Dowler, it reminds you that it is innocent families like them who have paid a very heavy price for truly grotesque journalistic practices, which are simply beneath contempt."

Less surprising, perhaps, is the position of Labour leader Ed Miliband. He said he "won't rest" until the deal is stopped. Mr. Miliband has made the issue an overtly political one. Mr. Cameron's communications director was Andy Coulson until January, when he resigned as the scandal began to break. Mr. Coulson was the editor of NotW when some of the alleged abuses took place and was hired even though he had resigned from NotW in 2007, after his royal correspondent and a private investigator were jailed for hacking into the cell phone messages of a member of the royal family. Coulson was arrested last week. Miliband has questioned Cameron's judgement for employing Coulson.

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