NTL, one of Britain's three main cable operators, said it would not be taking up an option to acquire the majority stake in the club owned by Cameron Hall Developments, the holding company which controls 50.8 per cent of the club.
The deal would have been pitched at 111.7p per share, valuing the controlling stake at over pounds 80m. Newcastle United shares fell 5p to 73.5p on the news.
Barclay Knapp, chief executive of NTL, said: "We're clearly disappointed in the circumstances that have led us to this decision. We will assess other opportunities in football as and when they arise."
He also warned that the Government's hard-line stance could mean that British clubs may struggle to keep pace with rivals in continental Europe, where media companies have been allowed to buy into teams. The implication is that British clubs could find it tough to match the transfer fees afforded by rivals in other countries such as Italy.
NTL said it took the decision after legal advice suggested that its bid would also have been blocked on competition grounds. The MMC blocked the BSkyB-United deal on the grounds that it would be against the public interest and damage competition between broadcasters.
Newcastle said it understood NTL's decision and that results on the pitch remained the key to its business performance.
"Ruud Gullit [Newcastle United manager] continues to do an excellent job and our fans are looking forward to our second successive FA Cup Final appearance," said the chairman and chief executive, Freddie Fletcher, in a statement.Reuse content