This latest shake-up in the sector is seen as a bid by the media mogul to strengthen his European television operations as the telecommunications sector enters the market to screen live football matches featuring some the world's biggest clubs.
BSkyB has agreed to buy 21st Century Fox's 100-percent stake in Sky Italia and its 57.4-percent interest in Sky Deutschland, a statement said. Murdoch's 21st Century Fox media conglomerate currently owns 39 percent of BSkyB.
BSkyB said it planned to acquire the rest of Sky Deutschland from the German group's minority shareholders, creating a pan-European TV giant in deals costing the British group a total of up to £7.0 billion (€8.8 billion) in cash.
"The enlarged company will be a world-class multinational pay TV provider that serves 20 million customers and brings together the leading pay TV businesses in three of Europe's four biggest markets," BSkyB said in the statement.
As part of the tie-up, BSkyB said it would transfer its minority stake in National Geographic Channel to 21st Century Fox at a value of £382 million.
"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," BSkyB chief executive Jeremy Darroch said in Friday's statement.
BSkyB is facing intense competition from British telecoms firm BT, which launched its own pay-TV sports channels last year showing English Premier League football.
And BT outgunned BSkyB last November to secure exclusive rights to televise across Britain all of Europe's Champions League and Europa League football matches for three seasons from 2015.
Earlier this year, British mobile phone group Vodafone bought Spanish cable giant Ono for €7.2 billion, having already snapped up Kabel Deutschland, the largest cable operator in Germany, for €7.7 billion in 2013.
US giant Liberty Global took over its British rival Virgin Media last year in a deal worth $23.3 billion.