Rupert Murdoch, chairman of the scandal shrowded News Corp. empire, lost an almost-sealed deal with New York schools after passionate protests.
ALBANY - The Rupert Murdoch phone hacking scandal has prompted the state to kill a controversial $27 million contract with one of the media mogul's subsidiary companies.
State Controller Thomas DiNapoli this week quietly rejected the Education Department's contract with Wireless Generation, a News Corp. affiliate.
Wireless Generation was to pocket $27 million of the state's $700 million in "Race to the Top" funds to develop software to track student test scores.
News Corp.'s British tabloid "News of the World" was shuttered last month amid a phone hacking and police bribery scandal.
U.S. Attorney General Eric Holder is reviewing whether reporters from Murdoch's media empire hacked the phones of any 9/11 victims.
The controversy proved too much for the state to stomach.
"In light of the significant ongoing investigations and continuing revelations with respect to News Corp., we are returning the contract with Wireless Generation unapproved," DiNapoli's office wrote to the Education Department.
DiNapoli's office also cited an "incomplete record" about Wireless Generation's qualifications as a cause for concern.
A spokeswoman for the company declined comment Thursday, and said Wireless Generation had not received any notification from the state.
Steamed state education officials slammed DiNapoli, accusing him of caving to teachers' unions - whose members opposed handing over data to Wireless Generation.
"The controller has allowed political pressure to get in the way of vital technology that would help our students," Education Department spokesman Jonathan Burman said.