Rupert Murdoch's media group News Corp is withdrawing its bid to take full control of satellite broadcaster BSkyB.
The announcement came in the wake of the growing scandal over phone-hacking.
News Corp had hoped to buy the 61% of BSkyB it did not already own, but in a statement, it said the deal had become 'too difficult to progress in this climate'. The company said it would remain a shareholder in BSkyB.
Earlier this week, British Culture Secretary Jeremy Hunt referred the proposed bid to the UK's Competition Commission.
He said the Competition Commission would be able to consider 'all relevant recent developments' in evaluating the proposed merger - a reference to the phone-hacking and payments to police scandals which led to News Corp's decision to close the News of the World.
News Corp eyeing UK papers sale - report
Earlier, the Wall Street Journal reported that News Corp was considering the sell-off of its remaining British newspapers. The group has already decided to close the News of the World in the wake of the phone hacking scandal.
Citing unnamed sources, the Journal said News Corp has explored whether there are any potential buyers for News International, which includes British newspapers the Sun, the Times of London and the Sunday Times.
The WSJ, which is also owned by News Corp, said Murdoch himself has long opposed such a move and considers News International one of his favourite components of his media empire.
The paper, citing the same sources, said that there did not appear to be any buyers because of the poor state of the newspaper industry, but added that News Corp may revisit the idea in the next six months.
News Corp's board has broached the idea of selling off News International on a number of occasions in recent years but Murdoch himself always shot the idea down, the Journal said.
