Rupert Murdoch’s media powerhouse, News Corporation, has withdrawn its offer for UK broadcaster BSkyB, amid the phone hacking scandal that has rocked UK politics and the media.

News Corp. which already owns 39 per cent of Sky, was in line to take 100 per cent of the firm before the media storm broke. In the last week, Sky’s share price has nosedived, and Murdoch has been forced to give in to pressure to drop his offer, at least until all investigations into the media firm are concluded.

As well as a police investigation over the phone hacking incidents, the Secretary of State for Culture, Olympics, Media and Sport may have referred the proposed transaction for Sky to the Competition Commission for a detailed review.

The leading concern is that should the deal go through, News Corp. would own over 50 per cent of the UK’s media. But on Thursday there was speculation by the BBC that News Corp. may even be compelled to give up its minority stake if it is deemed not to be a “fit and proper” owner by regulator Ofcom following the conclusion of current police investigations.