Sky is “fit and proper” to hold a broadcasting licence but its former chairman James Murdoch was spared no criticism today after the media regulator slammed his handling of the phone hacking scandal.
While Ofcom said there was no evidence that Mr Murdoch knew of wrongdoing at the News of the World or that he was complicit in a cover-up, it hit out at his failure to uncover the problems earlier.
It said: "We consider James Murdoch's conduct, including his failure to initiate action on his own account on a number of occasions, to be both difficult to comprehend and ill-judged."
Media regulator Ofcom carried out a review of Sky after James Murdoch and News Corporation, which owns 39% of its shares, were engulfed in the phone hacking scandal which led to the closure of News Corp's News of the World.
Ofcom found no evidence that Sky was directly or indirectly involved in any of the wrongdoing either admitted or alleged.
Mr Murdoch - son of media mogul Rupert Murdoch, who controls News Corp - has since resigned as chairman at Sky in a bid to distance the broadcaster from the scandal, claiming he had become a "lightning rod" for bad publicity. He remains a non-executive director of BSkyB and an executive director at News Corp.
Mr Murdoch apologised for his conduct in a letter to the Culture, Media and Sport Select Committee in March, when he said he should have "asked more questions, requested more documents and taken a more challenging and sceptical view of what I was told".
He had no involvement with News International until the end of 2007, which was almost a year after the sentencing of News of the World's royal editor Clive Goodman and private investigator Glenn Mulcaire for phone hacking.
But after he took over as chief executive, he received an email suggesting that criminal activities were more widespread, although he claimed he failed to read the correspondence fully.
Ofcom added: "We consider that the events set out above raise questions regarding James Murdoch's competence in the handling of these matters and his attitude towards the possibility of wrongdoing in the companies for which he was responsible."
In relation to Rupert Murdoch, who was a director of News International until July, Ofcom said there were currently no grounds to conclude that he acted in a way that was inappropriate.
Ofcom's ruling lifts a cloud from Sky, which welcomed the decision today and said the regulator was right to conclude that it was a fit and proper broadcaster.
It said in a statement: "As a company, we are committed to high standards of governance and we take our regulatory obligations extremely seriously.
"As Ofcom acknowledges, our track record of compliance in broadcasting is good."
Ofcom said it was satisfied that it had considered all the relevant evidence but would consider any further information as it emerged.
News Corp welcomed Ofcom's decision but defended James Murdoch, saying he deserved credit for leading Sky to its an outstanding record as a broadcaster.
It said: "We are pleased that Ofcom recognises BSkyB as a fit and proper holder of a broadcast licence and remain proud of both News Corporation's and James Murdoch's distinguished record in facilitating the transformation of Sky into Britain's leading pay television and home communications provider.
"We disagree, however, with certain of the report's statements about James Murdoch's prior actions as an executive and director, which are not at all substantiated by evidence."