Disney raised its offer for the assets from $52.4bn to $71.3bn and also for the first time made an alternative available to Fox shareholders who would rather receive an element of cash instead of Disney shares.
The move comes a week after Comcast, the US cable giant, offered $65bn in cash for the assets, which include 20th Century Fox – the Hollywood film studio behind hits such as Avatar, X-Men and Ice Age – US cable TV networks including FX and National Geographic and international pay television assets including Star TV in India.
The sale also includes Fox’s stake in Sky plc, Europe’s largest pay-television broadcaster, which owns Sky News.
This stake currently stands at 39.1% but Fox is seeking to take full control of the business prior to selling it on to Disney.
Fox’s board is recommending the increased Disney offer to its shareholders and said that it was “superior” to the offer from Comcast last week.
Rupert Murdoch, executive chairman of Fox, said: “We are extremely proud of the businesses we have built at 21st Century Fox and firmly believe that this combination with Disney will unlock even more value for shareholders as the new Disney continues to set the pace at a dynamic time for our industry.
“We remain convinced that the combination of 21st Century Fox’s iconic assets, brands and franchises with Disney’s will create one of the greatest, most innovative companies in the world.”
Mr Murdoch, whose family trust has an economic interest of 16.6% in Fox, stunned the media industry when, just before Christmas last year, he agreed to sell most of the company to Disney in a deal that would represent the biggest shake-up in Hollywood since the 1930s – bringing together respectively the fourth and second largest movie studios in Tinseltown.
Mr Murdoch has always favoured Disney’s offer because he is a big admirer of the company’s chief executive, Bob Iger, under whom Disney has become a global entertainment and theme parks powerhouse enjoying substantially stronger growth than the wider media sector.
It is also thought Comcast’s all-cash offer would crystallise a significantly capital gains tax bill for Mr Murdoch than would Disney’s offer.
Both Comcast and Disney are keen to buy Fox’s entertainment assets, including Sky, in order to acquire film and television content that would enable them to compete more effectively with digital giants, like Netflix and Amazon, who sell their content directly to viewers.
Under the revised offer, Disney is now offering $38 per Fox share for the assets, up from the previous 28%. Fox shareholders would be able to accept up to half of that in cash.
Shares of Fox, which closed at $44.71 on Tuesday night, are expected to open sharply higher when Wall Street opens today.
The increased offer from Disney is expected in turn to enable Fox to raise its offer for Sky.
Fox, which has been trying to take full control of Sky since December 2016, originally offered 1075p per Sky share but this has since been trumped by a 1250p-a-share offer from Comcast that values the whole of Sky at £22.1bn.
Sky shares were up 43p at 1381p at 1425 BST.