The UK government has set up a multi-billion-pound bidding war for Sky between Rupert Murdoch's 21st Century Fox and US cable giant Comcast.
Culture Secretary Matt Hancock has cleared Comcast's bid, and said Fox can go ahead if it sells Sky News.
Fox has been chasing approval from UK regulators since 2016 to buy the 61% of Sky it does not already own.
The bid was held up by politicians and regulators who feared it could give Mr Murdoch too much power over UK media.
The Murdoch-controlled Fox has been attempting to address those concerns through a series of concessions, including selling Sky News to Disney once the deal is complete.
Separately, Disney has struck a deal to buy Fox's entertainment assets, including its stake in Sky.
However, US media giant Comcast waded into the bidding in February with a £22bn offer for Sky, trumping the offer from Fox, which valued the broadcaster at £18.5bn.
If Comcast wins the battle, it will not be compelled to sell off Sky News.
There will now be further talks between officials at the Culture Department and Fox, Sky and Disney with the aim of finding "an acceptable form of remedy," Mr Hancock said.
Mr Hancock said he needed to be confident that the final undertakings ensured the continuation of Sky News's long-term financial viability, and that it could continue to operate as a major UK-based news provider making independent editorial decisions.
He added that talks would start immediately "so we can all be confident Sky News can be divested in a way that works for the long-term".
"I am optimistic that we can achieve this goal. However, if we can't agree terms at this point, then I agree with the CMA that the only effective remedy now would be to block the merger altogether. This is not my preferred approach."
Mr Hancock hopes to publish the result of the consultation in a fortnight.
'Good starting point'
Fox said: "We now look forward to engaging with the Department for Culture, Media and Sport and we are confident that we will reach a final decision clearing our transaction."
Sky said it welcomed the announcement and it noted that Mr Hancock felt that undertakings provided by Fox were a "good starting point to overcome the adverse public interest, effects of the proposed merger that he has identified".
Shadow culture secretary Tom Watson said that the approval of both bids "means that this is not the end of the story".
He said Labour's priority going forward was to "safeguard the future of Sky News" which is a "beacon for independent and rigorous journalism".
"Were the Fox/Disney deal to fail it could leave Sky News isolated from Sky and owned by a foreign company with few news interests in the UK. It's hard to see how that would be in the public interest," he said.
Shares in Sky ended 0.3% higher at £13.54. Comcast's offer values each Sky share at £12.50 - considerably more than Fox's offer of £10.75.