New York — News Corp., which has a 39 percent shareholding in BSkyB, announced Wednesday its decision to withdraw its $12.5 billion acquisition bid for the satellite TV company. A tsunami of negative opinion has washed over the media conglomerate related to the phone hacking controversy and its ownership of the News of the World tabloid.

Just days before the announcement, the British government seemed ready to give the green light to News Corp.’s bid — potentially giving it a 61 percent majority of BSkyB. But outrage from lawmakers and the general public forced the news giant to step down.

“We believe 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,” said Chase Carey, chief operating officer of News Corp., in a statement.

Labour Party shadow culture secretary, Ivan Lewis, asserted that the development was a “remarkable […] victory for the public of this country” and the Parliament, but that the voluntary decision by News Corp. chairman and chief executive officer Rupert Murdoch should not deter anyone from investigating this criminal act.

“What we mustn’t allow this announcement today to do is to end the need to get to the bottom of this unethical and criminal behavior that has so damaged our newspaper industry and has also threatened to undermine our democracy,” said Lewis to BBC News.

Back in 2006, News Corp. made the news after their now-defunct British paper’s editor Clive Goodman was charged with intercepting voicemail messages left for members of the British Royal Family. He and private investigator Glenn Mulcaire were jailed in 2007 for related activities, and the police found no reason to doubt the News of the World‘s statement that these men were a few “bad apples” and that the criminal activity was limited.

Three years later in July 2011, News of the World was shut down after the newspaper was accused of accessing the voicemail of murdered schoolgirl Milly Dowler and victims of the July 7, 2011 London bombings. More recently, sister News Corp. paper The Sun has been accused of illegally obtaining access to financial and health records belonging to the family of former Prime Minister Gordon Brown, a charge the publication denies.

BSkyB’s chief executive Jeremy Darroch commented on the news, saying: “We remain very confident in the broadly based growth opportunity for BSkyB as we continue to add new customers, sell more products, develop our leading position in content and innovation, and expand the contribution from our other businesses. I would like to commend all our employees for their unrelenting focus throughout the offer period and thank them for their continuing support.”

News Corp. executive Rebekah Brooks ((née Wade) and Murdoch are scheduled to appear in front of the British Parliament next week to answer questions about the scandal, as is Murdoch’s son James Murdoch, who as deputy chief operating officer of News Corp. may have to answer criminal accusations that he misled Parliament in earlier questioning.

Related Links: (AllThingsD) (BSkyB) (The Telegraph)