The Liberal Democrat MP was stripped of the power to arbitrate over the £8bn takeover after being secretly recorded saying he had "declared war" on News Corp chief executive Rupert Murdoch.
Culture secretary Jeremy Hunt, who was handed the "quasi-judicial role" by David Cameron, has also faced questions over his impartiality, particularly after a key memo sent while Cable was still in charge appeared to show his support for the bid.
Appearing at the Leveson Inquiry into press ethics today, Cable said that most people in public life "have views", but they are required to "set those on one side".
In December 2010, he told undercover reporters from The Daily Telegraph that he was referring News Corp's bid to buy the 60.9% of Sky it did not already own to media regulator Ofcom for deeper scrutiny, in an attempt to block the takeover.
Asked by inquiry counsel Robert Jay QC about what is entailed in making a quasi-judicial decision, Cable said that it was to "consider representations, the evidence, the facts and decide on that and only on that".
He also said: "With an independent mind doesn't mean with a blank mind."
In his witness statement, the business secretary said that his statement about a "war on Murdoch" was meant to make the point that he had "no intention of being intimidated".
However, he added: "Clearly, I should not have volunteered my unprompted opinion, even in a private, confidential conversation."
Cable continued that he had a lengthy conversation with the undercover reporters on the day, in which he expressed "pent-up feelings".
He said he was in an "extremely tense and emotional frame of mind", as there was a protest taking place outside his constituency office at the time.
Cable said that he felt Murdoch's newspapers had "disproportionate political influence", but claimed that his views about News Corp were "actually quite nuanced".
"Some politicians got too close to them (Murdoch papers)," he said. "But I never had a bad experience myself at the hands of News International newspapers."
Discussing why he chose to turn down a meeting with News Corp executive James Murdoch to discuss the Sky bid, Cable said that he was not trying to be "disrespectful", but felt that it would not be "appropriate" after careful consideration.
Culture secretary Hunt is due to give evidence to the inquiry tomorrow, when he will attempt to prove that he acted "with scrupulous fairness" during the Sky bid review.