BSkyB deal to proceed despite scandal

U.K. gov't leader refuses to stop takeover

Prime minister David Cameron has insisted that News Corp.’s planned takeover of BSkyB should go ahead, despite the rapidly escalating criminal probe into allegations of phone hacking by News Corp.’s News of the World paper.

Cameron, whose spin doctor Andy Coulson was forced to resign in January over earlier claims that phones were hacked when he was editor of the paper, told Members of Parliament that it would be “illegal” to stop News Corp.’s planned buyout of the 61% of the paybox it does not own.

He rejected Labour Party leader Ed Miliband’s call to refer the BSkyB bid to the Competition Commission.

Miliband said the British public would react “with disbelief” if the deal went ahead when News Intl., the News Corp. offshoot that controls its British newspapers, was being investigated by the police.

The latest public consultation on the takeover ends Friday.

Cameron insisted his administration had followed the correct legal processes over the BSkyB bid.

The row over phone hacking at the News of the World has continued to dominate the U.K. media as more details of alleged illegal activity emerged on Monday, including intrusions into the voicemail of murdered schoolgirl Milly Dowler in 2002.

In his first public statement since the latest claims emerged, News Corp. topper Rupert Murdoch described alleged phone hacking at the News of the World as “deplorable and unacceptable” — but gave his backing to News Intl. CEO Rebekah Brooks.

Murdoch said he has told colleagues to “fully and proactively cooperate with the police in all investigations.”

His intervention came as News Corp. shares fell Wednesday by 5% at one stage on Wall Street, to $17.17, as U.S. investors reacted to the latest claims.

In Blighty, BSkyB shares closed 2.1% lower at £8.27 ($13.22), which will effect the final price Murdoch must pay for the satcaster. Meanwhile, advertisers including the Co-operative Group, have followed the example of Ford and suspended their advertising from the News of the World. Halifax, T-Mobile and Orange have either withdrawn or said they would review their accounts.

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