BSkyB will spend 1 billion pounds ($1.6 billion) to placate investors who lost out after News Corp bowed to public fury over a hacking scandal and dropped a bid to take full control of the satellite broadcaster.

BSkyB, whose board on Thursday voted unanimously to keep News Corp boss Rupert Murdoch's son James as its chairman, will return 750 million pounds to investors with a share buy-back and a further 253 million pounds via a final dividend of 14.54 pence a share.

The dividend lifts its payout for the full year by 20 percent to 23.28 pence per share, creating a total dividend pot of over 400 million pounds of which News Corp, as 39 percent shareholder in BSkyB, will get almost 160 million pounds.

Shares in BSkyB have fallen over 15 percent since a long-simmering phone hacking case erupted this month, derailing a planned buyout by News Corp, shutting down Murdoch's 168-year-old News of the World newspaper, ending the careers of two top policemen and rocking the British political establishment.

News Corp has seen its stock fall 10 percent on fears of reputational damage to the wider group, wiping billions of dollars off its market value and shaking Murdoch senior's grip on the media group. News Corp's BSkyB stake will not change after the buy-back.

Allegations of hacking at News Corp's British newspapers, and in particular reports journalists accessed the voicemails of murder victims, have triggered a judicial inquiry and calls from some politicians to cap Murdoch's media ownership, making any renewed approach for BSkyB a distant prospect.

BSkyB's appeal to News Corp was highlighted on Friday as the broadcaster unveiled a slightly better than expected 16 percent jump in full-year revenue to almost 6.6 billion pounds and a 23 percent rise in operating profit to 1.07 billion pounds.

Analysts had expected revenues to come in at 6.45 billion pounds according to the average forecast provided by Thomson Reuters I/B/E/S while operating profit had been seen at 1.06 billion pounds.

While Sky is not immune to tougher economic conditions, we have continued to see good demand across our product portfolio, BSkyB chief executive Jeremy Darroch said in a statement.

In a sign that its subscribers may be feeling the pinch as the British economic recovery struggles to find its footing, the company said its closely watched average revenue per user (ARPU)dipped to 539 pounds at the end of the fourth quarter from a rate of 544 pounds in the third quarter. ($1 = 0.612 British Pounds)

(Editing by Chris Wickham)