Agreement between News Corporation and BSkyB would go some way to clear the way for Mr Murdoch's ambitions, though any deal would also need regulatory approval.
"Both parties have agreed to work together to proceed with the regulatory process in order to facilitate a proposed transaction," said News Corporation.
BBC business editor Robert Peston said that if the deal did go ahead, it would "erase any scintilla of doubt that Mr Murdoch's News Corporation would be the most powerful of all the traditional media groups in the UK".
"The combination of Sky with his newspapers, such as the Sun and the Sunday Times, would generate annual revenues of around £8bn, compared with the £4.6bn income of the next largest player, the BBC."
Our editor added that any agreed deal between News Corporation and BSkyB may cause problems for the UK's coalition government.
End Quote Robert Peston BBC business editor
The opportunities for cross-promoting those newspapers on Sky will be seen by other newspaper groups as giving News a huge advantage.”