• by Wayne Friedman , July 13, 2011

In the wake of its U.K. newspaper scandal, News Corp. is pulling out of its proposed takeover of British Sky Broadcasting, all in an effort to calm shareholders and other business partners.

There is overwhelming government official sentiment against News Corp.'s buying the remaining stake in BSkyB. The media giant already has a minority stake in the satellite broadcaster -- and political opposition has caused the big media company to stop its proposed deal.

"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," stated Chase Carey, president and COO of News Corp., Wednesday.

He added: "News Corporation remains a committed long-term shareholder value in BSkyB. We are proud of the success it has achieved and our contribution to it."

The day before -- in an effort to boost the stock price of News Corp. -- the company announced a $5 billion share buy-back program. News Corp. stock closed on Tuesday up 1.7% to $16.36 a share. Shares of BSkyB were down 0.5% to 688.50 U.K. pounds.

Analysts believe News Corp. will hold onto its 39% stake in BSkyB for some time.

Last week, News Corp. closed down its profitable News of the World U.K. paper in the wake of alleged phone hacking of government officials and others, as well as cash bribes to U.K. police.