Rupert Murdoch’s News Corp. withdrew its bid for BSkyB Wednesday as the fallout from the phone-hacking cases continued. Anthony Faiola reports:

July 13, 2011- As the phone-hacking scandal continued to roil British politics, News Corp. announced that it was giving up its $12 billion takeover bid for full control of British Sky Broadcasting. It already owns 39 percent of the broadcaster.

In a statement, Chase Carey, deputy chairman, president and chief operating officer of News Corp., said: “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. 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 criticism of Cameron grew even as he outlined an extraordinary independent inquiry that could redefine the cozy relationships among the press, the police and politicians here.

During a grilling in Parliament, Cameron additionally pledged a probe into whether the phones of victims of the Sept. 11, 2001, terrorist attacks in the United States were among the thousands now believed to have been hacked by News of the World.

He also vowed to support an opposition motion to be voted on later Wednesday demanding that News Corp. give up its BSkyB takeover bid.

The U.S. has now begun an investigation into allegations that journalists at the News of the World tabloid sought to hack the phones of victims of the 9/11 attacks. Greg Sargent examines whether New York politicians will now take on Murdoch:

New Jersey Senator Frank Lautenberg has already called for an SEC probe into the general conduct of Murdoch’s media empire. But now we’ve got actual 9/11 families demanding an investigation into the specific — and incendiary — allegation that News of the World reporters tried to hack the phones of the 9/11 dead.

We don’t yet know a lot about these allegations, and it’s unclear what sort of probe could or should be launched or who would have juristiction. But the immediate question is this: If this latest chapter gains traction, how will New York’s leading politicians respond? First off, there are the local politicians with a national voice, like Mayor Michael Bloomberg and Governor Andrew Cuomo, both of whom have enjoyed good relationships with Murdoch’s influential New York Post. The paper beat up on Bloomberg’s “nanny state” initiatives and tax hikes, but it has been broadly supportive of the Mayor, and even more so of Cuomo. Now that there’s a highly emotional local angle, will they join in calls for a probe or generally comment on the allegations?



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