James Murdoch's future as chairman of British Sky Broadcasting was thrown into doubt on Monday after minority investors called for a corporate governance health-check of its board in the wake of the News Corp phone hacking scandal.

We think they should review the composition of the BSkyB board and the influence exerted by those with ties to News Corp, one top 10 investor in the British satellite broadcaster told Reuters on condition of anonymity.

A second top 25 investor in the company said BSkyB's corporate governance remained tricky but he denied market chatter that fellow shareholders were determined to drive out Murdoch.

News Corp's U.S. shares fell 4.7 percent in pre-market trading on Monday and the Australian stock sank to a two-year low after Rebekah Brooks, ex-chief executive of the company's UK arm, was arrested on Sunday and the head of London's Metropolitan Police Paul Stephenson quit over the scandal.

I think people would rather be cautious and mark it down rather than find a reason to defend it, said Invesco senior investment manager Jackson Leung in Melbourne. Invesco is News Corp's second-largest institutional shareholder with a 1.68 percent stake, according to Thomson Reuters data.

News Corp Australian shares ended down 4.1 percent at A$14.16 after touching a low of A$13.65.

Shares in a News Corp takeover target, pay-tv firm Austar , also fell on worries the deal may not proceed after the furor in Britain forced News to drop a $12 billion plan to buy all of highly profitable UK pay-TV broadcaster BSkyB

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Austar has agreed a $2 billion-plus takeover offer from its bigger rival Foxtel, which is owned by News Corp's News Ltd division, billionaire James Packer's Consolidated Media Holdings , and telecoms firm Telstra .

The Australian government last week said it may review media laws and ownership, following pressure from the influential Greens party.

Rupert Murdoch's News Ltd dominates the Australian newspaper industry, commanding nearly three-quarters of daily metropolitan newspaper circulation, and the UK scandal has riveted attention in his homeland.

Murdoch, who now has U.S. citizenship, started his global media empire in Adelaide when he inherited the now defunct Adelaide News from his father, Sir Keith Murdoch.

He owns 150 national, capital city and suburban news brands in Australia, which include mass circulation daily tabloids in Sydney (Daily Telegraph) and Melbourne (Sun Herald) and the national daily The Australian.

Austar closed down 3.8 percent while Consolidated Media fell 2.9 percent, against a flat broader market, reflecting investor concerns on the future of the deal.

Still, the Austar and Foxtel camps and banking sources familiar with the deal said the offer was on track and did not expect it to be derailed because Foxtel is only 25 percent owned by News Corp.

Australia's competition watchdog is due to rule on the bid for Austar on July 21.

Murdoch, through BSkyB, also has an interest in 24-hour news channel Sky News Australia, which is 33 percent-owned by BSkyB. Sky News TV in Australia is in a battle with the government-owned Australian Broadcasting Corp to run the country's overseas TV network -- Australia Network.

SHARES OFF 18 PERCENT IN JULY

News Corp's Australian shares have dived 18 percent, or nearly A$3, this month as the News of the World hacking scandal engulfed News Corp executives.

On Monday, the shares fell 7.6 percent to an intraday low of A$13.65, the weakest since July 2009, and also a 7.4 percent discount to News Corp's last U.S. close, implying a $3 billion drop of market capitalization at that level.

Volume was 11.4 million shares, or 4.5 times the average daily volume over the past 90 days, according to Thomson Reuters data.

There's a lot of sentiment and emotion driving the stock, said Simon Burge, chief investment officer at ATI Asset Management in Sydney, which holds News Corp shares.

From an earnings point of view, News of the World was less than 1 percent of earnings but this has catapulted to something greater and it is hard to quantify.

(Additional reporting by Michael Erman in New York and Sonali Paul in Melbourne; Editing by David Cowell)

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