The News Corp. phone-hacking scandal has already resulted in the closure of its News of the World tabloid, but it has now ruined the company's proposed takeover of BSkyB and prompted concern from Congress.
Sen. John Rockefeller, chairman of the Senate Commerce Committee, on Tuesday said in a statement that the company's alleged phone hacks are "offensive and a serious breach of journalistic ethics."
"This raises serious questions about whether the company has broken U.S. law, and I encourage the appropriate agencies to investigate to ensure that Americans have not had their privacy violated," Rockefeller continued.
Given that the journalists' reportedly hacked into the voicemails of family members affected by the July 7, 2005 terrorist bombings in London, Rockefeller was concerned that the hacking extended to victims of the September 11, 2001 attacks in the U.S. or other Americans.
"If they did, the consequences will be severe," Rockefeller warned.
Earlier this month, the News of the World was accused of hacking into the voicemail of a young murder victim while the investigation into her disappearance was still ongoing. The paper allegedly deleted voicemail messages, giving her parents false hope that she was alive and accessing her phone. This was not the only hacking incident, however; the paper was already punished for phone hacking several years ago, but this particular revelation snowballed, prompting a lengthy debate in the House of Commons and even bringing up allegations of police bribery.
The controversy eventually prompted News Corp. parent company News International to shut down the News of the World; its last issue was on Sunday, after 168 years in circulation.
During that House of Commons debate, meanwhile, members of Parliament called on regulators to stop News Corp.'s planned takeover British Sky Broadcasting Group PLC (BSkyB). At the time, the country's attorney general said the phone hacking and the acquisition were likely two separate issues, but the phone-hacking scandal has apparently taken its toll. On Wednesday, News Corp. announced that it "no longer intends to make an offer" for the company.
"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," Chase Carey, president and COO of News Corp., said in a statement. "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 company reserved the right to proceed with the acquisition in the next six months if someone else tries to buy BSkyB.