Rupert Murdoch and John Malone on Friday ended two years of negotiations as Mr Malone's Liberty agreed to exchange its $11bn worth of voting shares in News Corp for the media group's 38.5 per cent stake is satellite operator DirecTV.
The deal, aimed at securing Murdoch family control of News Corp and which is expected to increase the family's voting stake to around 38 per cent, comes exactly three years after Mr Murdoch acquired the DirecTV shares after a prolonged battle.
In addition to the DirecTV shares, Liberty will get three regional sports networks in Denver, Pettsburgh and Seattle and $550m in cash, the companies said on Friday.
"DirecTV and the regional sports networks represent a critical step in our efforts to transform Liberty Media into a well-positioned, focused operating company," said Greg Maffei, president and chief executive officer of Liberty.
The deal was verbally agreed to by the two moguls around two weeks ago.
For News Corp shareholders the transaction is the equivalent to an $11bn share buy-back, which will remove around 16 per cent of the company's outstanding shares.
The transaction is structured as a combination of cash and assets to allow News Corp and Liberty to cash in their substantial gains on DirecTV and News Corp respectively and save billions of dollars in tax payments.
Liberty said it expected DirecTV's president and chief executive officer, Chase Carey, to remain in his role.
The deal comes more than two years after Mr Malone outfoxed Mr Murdoch by secretly increasing his voting stake in News Corp to 19 per cent. Mr Malone's move left the 75-year-old Mr Murdoch worried about his family's control of the media empire he built up.
His family currently controls about 30 per cent of voting shares, and he imposed poison pill measures to prevent Mr Malone from increasing his stake.
Mr Murdoch fought with rivals and regulators to acquire a stake in DirecTV, the biggest US satellite operator, which he felt would increase his distribution clout and promote cable channels such as Fox News.
However, since its purchase, the inability of satellite television to offer easily telephone and internet access, services po****r from cable rivals, has led to a reassessment of DirecTV's importance.
Mr Malone, who controls Liberty and is one of the pioneers who built up the modern cable business in the US and the multi-channel television market, sold his cable group several years ago and has since then expressed his regret at no longer having distribution muscle.
The DirecTV could again make Mr Malone, 65, a player in the media business. Recent moves to bolster film production capabilities have added to the view that Mr Malone wants to again move into the media spotlight.
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