UPDATE 1-James Murdoch to stay on as BSkyB chairman -sources

LONDON Thu Jul 28, 2011 12:17pm EDT

LONDON Jul 28 (Reuters) - James Murdoch is to stay on as chairman of BSkyB after the British satellite broadcaster's board voted unanimously in his favour, two sources with knowledge of the situation told Reuters on Thursday.

"James Murdoch will stay on as chairman," one source said. "He had unanimous support."

Several shareholders had called for him to step down over his role in a phone-hacking scandal at the News of the World, which is owned by News Corp , his father Rupert's company of which he is also an executive.

But the board chose to endorse Murdoch, an ex-chief executive of BSkyB, although it would keep a close eye on external events that might prove relevant to his role, one of the sources said.

"The role of chairman was discussed at some length," the source said, describing the board meeting, which took place on the eve of BSkyB's annual results announcement.

The phone-hacking scandal became a matter of national outrage in Britain a few weeks ago when a murdered schoolgirl's voicemails were revealed to have been intercepted.

The matter, which has raised questions about the conduct of politicians up to the prime minister and police as well as the media, is the subject of a police investigation, a parliamentary probe and a judicial inquiry in Britain.

(Reporting by Georgina Prodhan)

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