News Corporation is dropping its planned bid to take full ownership of satellite broadcaster BSkyB.
The announcement was made as the House of Commons prepared to vote for a motion supported by all major party leaders calling for the bid to be scrapped.
It follows a scandal over phone hacking at News Corp's UK newspaper group.
News Corp deputy chairman Chase Carey said the bid had become ''too difficult to progress in this climate''.
The scandal has already led to the closure of the UK's biggest-selling newspaper, the News of the World.
BSkyB's share price briefly dropped following the announcement, taking it down 4% for the day, before recovering to close 2% up.
The BBC reports the company's share price has fallen some 20% since peaking at 850 pence earlier this month.
News Corp already owns 39% of BSkyB, but may be compelled to give up even this minority stake if it is deemed not to be a "fit and proper" by Ofcom following the conclusion of current police investigations.
Prime Minister David Cameron says anyone involved in the phone-hacking scandal should play no part in the British media again, no matter how high in the organisation they are.
Good time to buy
Analysts says it's a good time to buy shares in News Corporation.
Citigroup media analyst Jason Bazinet says News Corp is a cash-rich company, which can keep buying shares if it does not buy other assets.
He says other cable businesses that News Corp may consider include the US-based cable networks, Scripps Networks and AMC Networks.
Analysts expect New Corp to try again for ful control of BSkyB, although more heads may have to roll within the company.
