ACCC chairman Rod Sims said the change in ownership structure was unlikely to substantially lessen competition.
Under the terms of the merger, News would end up with a 65 per cent stake in the new entity, and Telstra 35 per cent. Telstra and News currently share a 50-50 per cent stake in Foxtel, while Fox Sports is wholly owned by News.
News and Telstra announced in August that the merger, if approved, would be the launching pad for a float of the new company.
News said this afternoon it welcomed the decision and would work to complete the transaction.