The government has asked the media regulator, Ofcom to reassess media baron Rupert Murdoch's takeover bid for broadcaster BSkyB in the light of a phone hacking scandal. This move can provide a basis to block the multi-billion dollar buyout.
Ofcom is already assessing whether News Corps is a 'fit and proper' holder of a broadcast licence. The new request to Ofcom follows a report in the Independent newspaper that lawyers were drawing up plans to block Murdoch's bid to buy out the profitable pay-TV operator BskyB.
The development underlined the political pressure on Prime Minister David Cameron over the revelations which have caused public outrage over the behaviour of some journalists, police and politicians.
Shares in BSkyB dropped more than seven percent on Monday morning after a similar fall on Friday. News Corp shares fell more than 5 per cent in New York last week. "We believe the deal is all but dead," Panmure Gordon analyst Alex DeGroot said.
Murdoch himself has shown no sign of backing away from the deal.
Opposition Labour party leader Ed Miliband said on Sunday he would force parliament to vote this week if Cameron did not take steps to halt News Corp's $14-billion (8.7 bn pounds) bid for the 61 per cent of BSkyB that it does not already own.
A vote in parliament could split the coalition between Cameron's Conservatives and the Liberal Democrats who, traditionally less favoured by Murdoch's media, have signalled they could vote with Labour on the issue.
