British Sky Broadcasting has struck a deal with Rupert Murdoch to buy his 100 per cent stake in Sky Italia and 57.4 per cent interest in Sky Deutschland.

The £4.9 billion ($8.3 billion US) deal gives BSkyB a chance to build a pan-European TV distribution service, while Murdoch gets cash to put toward his takeover bid for Time-Warner.

BSkyB is already 39 per cent owned by Murdoch’s 20th Century Fox and that ownership stake remains the same.

But the deal unlocks cash from within Murdoch’s extensive media holdings to help in his $80-billion US bid for Time Warner in the U.S., owner of CNN and HBO.

Putting all the Sky holdings under one roof creates a more streamlined structure for his European cable and satellite distribution holdings and promises synergies over programming and network connections.

"The three Sky businesses are leaders in their home markets and will be even stronger together,” Said BSkyB CEO Jeremy Darroch.  “By creating the new Sky, we will be able to use our collective strengths and expertise to serve customers better, grow faster and enhance returns."

The service would serve a combined 20 million customers.

Murdoch tried to take over 100 per cent of BSkyB in 2011, but the phone-hacking scandal involving his News Corp. publications led to that deal being dissolved.

Time Warner’s board has rejected his $85 US a share bid, saying the company has much more potential for future earnings if it is not owned by Fox.

Murdoch’s jostling of his European holdings may be a way of getting cash to sweeten the offer, without hurting Fox’s credit rating.

In taking over CNN, the media magnate would put a new complexion on the biggest rival to Fox News in the U.S. He would also come to dominate U.S. content with ownership of money-spinner HBO.