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News Corp. Withdraws Bid for BSkyB

Amid controversy surrounding reporting practices at its U.K. newspapers, News Corporation announced Wednesday that it will withdraw its bid for British Sky Broadcasting Group.

“We believed that the proposed acquisition of BSkyB by News Corporation would benefit both companies but it has become clear that it is too difficult to progress in this climate,” according to a statement from News Corp. “News Corporation remains a committed long-term shareholder in BSkyB. We are proud of the success it has achieved and our contribution to it."

The announcement was made a day after Prime Minister David Cameron announced a wide-ranging inquiry into newspapers in the country, and called for News Corp. to withdraw its bid.

"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," Cameron said to Parliament.

Cameron said he plans to look into whether 9/11 victims were also targeted in the phone hacking scandal. He said that a "firestorm" was engulfing parts of the media and police, and those who had committed offenses must be prosecuted.

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.

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 culture, practices and ethics of the press, its relationship with police and the failure of the current system of self-regulation, which is expected to last up to 12 months. Only then will the inquiry focus shift to what went wrong at the News of the World tabloid and other papers, Cameron said.

Meanwhile, shares in BSkyB were down 2.3 percent Wednesday, the seventh straight day of losses, as hopes faded for a share-boosting takeover bid.

News Corp. is the parent company of Fox News and FoxNews.com.

The Associated Press contributed to this report.