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BY STEVEN HSEIH

ANCHOR MEGAN MURPHY

You're watching multisource business video news analysis from Newsy. 

Rupert Murdoch’s News Corp has dropped its 12.5 billion dollar bid for British Sky Broadcasting.
The move comes amidst the huge phone-hacking scandal which began with the now-defunct tabloid News of the World.  The deal would have made NewsCorp the largest media company in Britain. The BBC’s Robert Peston says - for Murdoch, letting go really hurts.

“...he was desperate to get control of BSkyB.  He feels he created it.  It’s a hugely profitable and growing business, and he wanted access to all that cash.  So, it will be incredibly painful for him to have had to abandon that ambition.”

The announcement comes just after British Prime Minister David Cameron joined party leaders in calling on Murdoch to drop the bid. Here’s BSkyB’s own Sky News touting the power of political pressure…

“That is responding to the power of Parliament.  Parliament did not have any legislative power to compel News International, or News Corp, to take this step.  But plainly, it is a very, very strong expression of the will of all politicians here at Westminster here that has been expressed, and the company responding to that.”

But politics aside, CNBC’s Jim Cramer says this new comes as a huge shock.

“Honestly, throughout this period, on Monday, I sat here and said, ‘look, the one thing that’s not going to happen is he’s not going to drop the bid because the regulators are just going to turn the other way, and this is all posturing.’  I mean, this is a situation where a couple of journalists just took down the biggest deal in Europe!”

NewsCorp still owns 39 percent of BSkyB, and says it has every intention of keeping its share of the company. So, what’s next?  A writer for the Guardian says – Murdoch could technically give it another shot.

“…under takeover panel rules News Corporation can theoretically bid again in six months, and it would have taken much longer than that for the existing bid to have cleared the various regulatory and political hurdles being thrown up in its way. Perhaps he will lick his wounds and return.”

According to the Wall Street Journal, BSkyB shares fell 3 percent following the announcement.  News Corp shares, on the other hand, rose slightly, gaining 59 cents.

Transcript by Newsy.