Britain's media regulator Ofcom on Thursday allowed BSkyB to keep its broadcasting licences, after a probe into allegations of hacking by the pay-TV giant which is part-owned by Rupert Murdoch.
"Ofcom considers that, on the evidence currently available and having taken into account all the relevant factors, Sky is fit and proper to hold its broadcast licences," the regulator said in a statement.
But Ofcom dished out harsh criticism of Murdoch's son James, who stepped down as BSkyB chairman in April, for failing to uncover the hacking scandal at his father's British newspaper wing.
The regulator called his behaviour "difficult to comprehend and ill-judged", though it cleared him of wrongdoing.
BSkyB, which is 39-percent owned by Murdoch's US-based News Corporation, was under investigation by Ofcom following the phone-hacking scandal that forced the Australian-born tycoon to close his News of the World tabloid in July 2011.
The 168-year-old newspaper shut down following a wave of public disgust over revelations that its staff hacked into the voicemail messages of a murdered schoolgirl as well as dozens of public figures.
On Thursday, Ofcom said there was no evidence that journalists at Sky had also used phone-hacking as a means of getting "scoops".
"To date, there is no evidence that Sky was directly or indirectly involved in any of the wrongdoing either admitted or alleged to have taken place at News of the World or (its sister paper) The Sun," Ofcom said.
"Sky has admitted to some instances of email hacking in two cases unrelated to the cases alleged to have taken place at NGN (the papers' publisher, News Group Newspapers). Ofcom is currently considering these issues under the Broadcasting Code."
The Sky News channel admitted in April that it illegally hacked into the emails of canoeist John Darwin, who notoriously faked his own death in a life insurance scam, as well as the account of a suspected paedophile.
BSkyB welcomed the Ofcom ruling on its licence.
"Ofcom is right to conclude that Sky is a fit and proper broadcaster," the company 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 also cleared 39-year-old James Murdoch, who stepped down as BSkyB chairman in April in a bid to distance the company from the hacking scandal, of any wrongdoing.
But it criticised his failure to uncover the scandal at his 81-year-old father's British newspaper wing News International, where he was executive chairman.
"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," the Ofcom judgment said.
James Murdoch has faced intense pressure over how much he knew about hacking at News International, and he quit the top post in February.
He apologised for his conduct in a letter to a British parliamentary committee in March, saying he should have "asked more questions, requested more documents and taken a more challenging and sceptical view of what I was told."
News Corp was forced to drop its bid for full control of the highly profitable BSkyB in July 2011 over the hacking scandal.