News Corporation, the media and entertainment group led by Mr Rupert Murdoch, is set to acquire full control of Fox Entertainment, its US TV and studio affiliate, in an all-share deal worth $5.86 billion (€4.48 billion).

News Corp, which already controls 82.1 per cent of Fox's equity and 97 per cent of its voting shares, is offering stock to Fox shareholders to consolidate its US media holdings in the US.

Mr Murdoch, who mooted a buyout last autumn, won board approval for the deal at the weekend. It follows the company's reincorporation in the US and a shift of its main stock market listing from Sydney to New York.

Fox's assets include Fox News, the controversial cable news channel, the Twentieth Century Fox studio and a 34 per cent controlling stake in DirecTV, the largest US satellite TV platform.

Under the deal, holders of Fox class A common stock will get shares in News Corp on a 1.9-for-1 ratio - equal to $33.54 a share. Mr Dave DeVoe, News Corp chief financial officer, said the offer represented a premium of about 7.4 per cent to Fox's closing price on January 7th, and 16.9 per cent to the average trading price over the last six months. "It will be a significant milestone in the simplification of News Corp's capital structure. It's a full and fair price."

The offer will be considered by Fox directors - not linked to News Corp - who are likely to form a special committee to make a recommendation to minority shareholders.

The all-paper deal would leave Mr Murdoch with cash reserves at News Corp to fund a possible buy-back of voting shares acquired by Liberty Media, the media investment company led by Mr John Malone.

He surprised News Corp last November by taking an option to increase his voting stake in the company to 18 per cent, second to the Murdoch 29 per cent holding.