Rupert Murdoch's News Limited made a $2.0 billion takeover bid for rival tycoon James Packer's majority-owned Consolidated Media Holdings, ahead of a widely expected company restructure.
News offered Aus$3.50 for each share of the media investment firm, which is focused on subscription television, with the bid subject to several conditions including approval from the competition watchdog.
If successful, News would emerge with 50 percent control of Foxtel, the country's biggest pay TV operator, and all of Fox Sports. Telecommunications giant Telstra holds the other half of Foxtel.
The announcement came ahead of a widely anticipated restructuring of News Limited to streamline its print and digital operations.
News Limited chief executive Kim Williams, the former head of Foxtel, has told staff he will be "sharing his vision for News as the company embarks on its next phase of growth" at 1:45pm (0345 GMT).
Like media companies worldwide, Murdoch's Australian arm, which controls 70 percent of the country's newspapers and has a stake in broadcaster Sky News, has been hit by advertisers and readers migrating from print to the Internet.
Its key rival Fairfax announced a major overhaul on Monday, with 1,900 jobs slashed and paywalls erected on the Sydney Morning Herald and The Age. Both will shift from broadsheet format to a tabloid size.
A report in Murdoch's flagship newspaper The Australian said more than 1,000 jobs at the organisation were likely to be lost, including 400 to 500 from an editorial staff of 3,000.
In a statement, Packer welcomed the proposal to take over Consolidated Media Holdings, a firm formed when Publishing and Broadcasting Ltd, founded by his grandfather Frank Packer and run by his father Kerry, changed its name in 2007.
He said it was a fair offer and would recommend it to shareholders.
"CPH welcomes News's proposal and looks forward to Consolidated Media and News working together to address the detailed terms and conditions," said Packer, who owns 50 percent of the company through Consolidated Press Holdings.
Kerry Stokes's Seven Group is the next largest owner, with 24 percent.
News of the deal helped push the company's share price almost 10 percent higher to Aus$3.38 by early afternoon.
If the sale goes ahead, it will be the first time in a century that the Packer family will have no media interests in Australia, apart from a small stake in the Ten Network.
Since his father's death, James Packer has moved away from the family's traditional media business and focused on creating a worldwide gaming empire.
As well as Australia, he has casino interests in Macau, the world's biggest gaming hub, and is expected to use the cash from the sale to pursue a full merger of his Crown Casino in Melbourne and Sydney's Star Casino.
For News, the takeover is its most significant investment in pay television since its bid to buy out British Sky Broadcasting broke down.
Morningstar head of equities research Peter Warnes said it was a logical step.
"Kim Williams has just moved over from heading Foxtel into News Corp. He would know more about Foxtel than probably anyone else -- he probably wrote the blueprint of where it is and where it's going," he said.