Foxtel and Fox Sports will merge into a single company by the end of June, with current Foxtel chief executive Patrick Delaney at its head.
News Corp will own 65 per cent of the new company and appoint the senior executives plus four directors including the chairman, while Telstra will hold the remaining 35 per cent and appoint two directors.
Rupert Murdoch-controlled News Corp and local telecommunications giant Telstra currently each own half of Foxtel, with News Corp the sole owner of Fox Sports.
News Corp chief executive Robert Thomson said the new company would be a "formidable force" focused on Australian content and cross-platform sports coverage.
"We will be able to use our powerful media platforms to promote the unique sports and entertainment assets in the two companies, and improve services for consumers and advertisers," Mr Thomson said in a statement.
The Australian Competition and Consumer Commission said in December it would not oppose the proposed merger because the commercial incentives of all parties would not substantially change and, therefore, be unlikely to lessen competition.
The Foreign Investment Review Board has also approved the deal.
Telstra chief executive Andy Penn said the combined company would compete strongly in the media market, which has been reshaped by the emergence of Netflix, Apple TV, Amazon and other streaming services.
"Our customers are streaming more and more sport and entertainment on their TV at home and on their mobile devices while on the move," Mr Penn said.
"Telstra will be the exclusive telco sales agent for the combined entity on mobile and IP products and we will continue with our broadcast reseller arrangements."
Australian Associated Press