The rest of the family - wife Victoria and children Amber, Olivia and Kit - are in hospital after being injured when they were thrown from their boat which then ran over them with its propeller.
Local watersports instructor Charlie Toogood has been hailed as a hero for leaping on to the vessel and stopping its engine before it could injure others in the popular holiday destination.
Coastguards said his ‘incredible seamanship and bravery’ prevented more people being killed in the horrific accident.
Mr Milligan and his daughter were apparently on a Bank Holiday getaway from their home in Wandsworth, South-West London.
His wife Victoria, 39, is in hospital with daughters Amber, 12, and 10-year-old Olivia, as well as her four-year-old son Kit.
Hundreds of holidaymakers watched in horror as the £60,000 speedboat then raced round in circles, its propeller slashing the helpless victims and turning the water 'red with blood'.
Mr Toogood heroically leapt on to the runaway boat from another craft in an attempt to prevent more people being hit.
The local harbourmaster Rob Atkinson warned that the tragedy should remind boat owners to ensure that their vessel's 'kill cord' - a safety device which cuts out the engine if the skipper goes overboard - is connected at all times.
'Please, please, please, when you have a boat fitted with a kill cord, make sure the kill cord is operating correctly and make sure it is attached to you because if you go out of the boat, it will stop the engine and it will prevent tragedies like this happening,' Mr Atkinson said.
Police are currently believed to be investigating whether or not the Milligans were using a kill cord on their boat.
Friends paid tribute to the Milligan family after the news of the deaths - PR executive Ben Fenton described Mr Milligan as 'one of the kindest, nicest funniest men I have ever met'.
Nigel Walley, managing director of digital media firm Decipher, added: 'Nick Milligan was a wonderful man whom I was proud to call a friend.'
The Milligans owned a beach house in Trebetherick, which is on the other side of the estuary from Padstow.
In an interview in 2011, the father said that the house was his ‘most treasured possession’.
Mr Milligan was a veteran television executive who helped to found Channel 5 and rose to become deputy chief executive.
In 2004, he moved to Sky Media, the advertising sales department of BSkyB, where he was managing director until his death.
Sky said in a statement this morning: 'Everyone at Sky is deeply shocked and saddened to learn of the tragic accident involving the Milligan family.
'Nick has been a great friend and colleague for many years and his loss will be felt across our company and the industry. Our very deepest sympathies are with his family at this time.'
Jim Colwell, of Devon and Cornwall Police, said today: 'Our thoughts are with the family and friends who are affected by this tragic incident.
'I'd like to thank the members of the public who assisted with the rescue of the individuals in the water yesterday and all of the emergency services for safely and swiftly moving the casualties to Derriford. Everyone's assistance undoubtedly saved lives.'
Good Samaritan Mr Toogood, married father of a five-month-old daughter, runs the Camel Ski School, which rents out equipment for holidaymakers as well as offering activities such as water-skiing.
‘Brave man, Charlie Toogood,’ one admirer wrote on Twitter. ‘Respect to Charlie Toogood who leapt aboard that out-of-control speedboat to cut the engine. He deserves a George Medal.’
Dog walker Simon Lewins, from Wadebridge, was around 100 yards from the speedboat as it circled in the water.
He said: ‘We saw a boat coming up the estuary and it seemed to take a right turn. As it took the turn it flopped and the people in the boat went out in the water and then the boat went round in circles and it seemed to come back into the group on three or four occasions.
‘We heard screaming and saw seagulls coming into the water, it wasn’t good. As this happens the boat was taking ever-decreasing circles with nobody in it because they were all in the water and it was slowing and it kept going for 10, 15 minutes.’
Matt Pavitt, of the North Cornwall Coastguard, praised locals' efforts to help, saying: 'Thanks to some incredible seamanship and bravery from some locals, they managed to get the boat under control and stop it from causing any further damage or harm.
'From there we were able to locate, recover the various people with injuries working with our colleagues from the ambulance service, Navy and RAF helicopters, two lifeboats and three coastguard teams.'
He told BBC Breakfast: 'This boat is eight metres long with a very, very powerful engine on the back.
'It is going round and round in circles and one of the local boatmen, we understand, was able to get alongside it and somebody actually jumped from one boat to the other to bring the boat under control. So incredible bravery which undoubtedly saved lives.'
Mr Atkinson added: 'There was plenty of scope for it to go wrong. Had he not got it under control who knows what would have happened. He deserves great credit for that. He risked his own life.'
The four survivors of the accident were flown to Derriford hospital in Plymouth.
It is believed that the boat, named Milly, is a rigid inflatable boat or RIB privately owned by the Milligan family. Speedboats are common sights around the harbour area in the popular tourist destination, nicknamed 'Padstein' because it is home of celebrity chef Rick Stein.
Source: DailyMail,BBC
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