By Simon Zekaria 

LONDON--In a deal that adds firepower to Rupert Murdoch's 21st Century Fox in its multibillion-dollar quest for Time Warner Inc., British Sky Broadcasting Group PLC has made its move to build "Sky Europe."

The U.K.'s market-leading pay-television operator Friday said it agreed to acquire its sister companies in Germany and Italy from 21st Century Fox in a deal worth just over $9 billion, the majority in cash, to create a pan-European pay-TV giant with around 20 million customers across Germany, Italy, Austria, the U.K. and Ireland.

For Mr. Murdoch, the deal provides a bulk of cash as 21st Century Fox weighs advancing its $80 billion takeover bid for rival media titan Time Warner, which rejected Fox's first overture. Fox said it expects net after-tax proceeds of $7.2 billion from the BSkyB transactions, which analysts have called crucial to making the math on a Time Warner deal work.

Fox also moved Friday to reassure skittish investors who have sent its shares down more than 6% since news of the Time Warner offer broke last week, saying it would renew its share-buyback plan next month. The new buyback authorization "will be executed regardless of any potential acquisition or investment activity by the company," Mr. Murdoch said in a release.

BSkyB said it would acquire Fox's 100% stake in the Italian TV company Sky Italia for GBP2.45 billion ($4.2 billion), GBP2.09 billion of which will be in cash. The U.K. company said it would buy 21st Century Fox's 57.4% stake in Sky Deutschland AG for GBP2.9 billion ($4.9 billion) in cash, valuing the German business at EUR6.75 a share.

BSkyB is also offering EUR6.75 a share to Sky Deutschland's remaining minority shareholders, but BSkyB Chief Financial Officer Andrew Griffith said the company is "neutral" about buying out those holders.

"We are not chasing down the minority," Mr. Griffith said. "There isn't a desire to get 100%. We'll see what happens. We are content with 57% if that is what we end up with."

The deal, also to be funded through new shares and debt, is subject to regulatory and shareholder approval. While there are no clear regulatory hurdles, price may be an issue for shareholders on both sides. Fox is BSkyB's biggest shareholder, holding a 39.1% stake, and plans to invest $900 million to maintain its stake at that level. BSkyB's other shareholders will need to be convinced the stakes are adequately valued.

Mr. Griffith said BSkyB is sure the deal will win the backing of stockholders. "We have spoken to all of our major shareholders and that has given me a confident belief they are happy," he said.

Shareholders seemed skeptical in early European trading. Sky Deutschland shares were up 1.8% to EUR6.78 in midday Frankfurt trading, suggesting holders are unlikely to accept BSkyB's EUR6.75 offer. BSkyB shares were down 4.9% to 879 pence, though Mr. Griffith said he was pleased with the market's "good reaction" on a day when the company is placing stock.

As part of the deal, BSkyB said it would transfer its 21% stake in the international National Geographic channels to Fox, at a value of GBP380 million. That would raise Fox's ownership stake in the cable and satellite channels to 73%.

Numis Securities, in a note, said the overall transaction has both financial and strategic rationale, with price and scale of synergies in line with expectations.

21st Century Fox was until June 2013 part of the same company as News Corp, owner of The Wall Street Journal and Dow Jones Newswires.

BSkyB said the new entity would be the No. 1 pay-TV provider in three of the four largest markets in Europe, helping the operator battle earnings erosion after spending heavily on technology upgrades, programming and premium sports-TV rights. BSkyB has 11.5 million TV customers, Sky Deutschland 3.7 million and Sky Italia 4.8 million. In total, "Sky Europe" will offer 47.5 million product subscriptions, more than 34 million of which come from BSkyB.

BSkyB Chief Executive Jeremy Darroch said shareholders have "understood the logic" of the deal, which is expected to close later this year.

Mr. Darroch said the enlarged business would offer commercial opportunity, benefits of scale and significant cost savings. "There remains significant opportunity to take up additional products across all businesses."

BSkyB said it expects GBP200 million of annual cost savings by the end of the second financial year after the deal is completed, with additional savings after that.

"We think the businesses in Italy and Germany are very high-quality," he told reporters. "This is the right deal for Sky at this stage of our development."

Asked if the "Sky Europe" deal would bolster Mr. Murdoch's bid to acquire Time Warner, Mr. Darroch said, "You'll have to ask him that." 21st Century Fox declined to comment.

Media executives are looking for cross-border heft in buying rights to show sports and entertainment, as well as developing content of their own, to lock in subscribers and drive up revenue. The drive is accelerating a consolidation boom. And the threat to pay-TV operators is intensifying across global convergence of TV and the Internet, such as from cable, rival online download platforms and from cheaper over-the-top streaming services, including from Netflix Inc.

"The trend in media right now is like that, and I don't expect that to change," Mr. Darroch said. "Media is an attractive business."

Separately, BSkyB Friday posted lower yearly profit as costs hit its earnings, even as demand for new products drove up revenue.

BSkyB's net profit in the fiscal year ended June 30 fell to GBP865 million from GBP979 million in the year-earlier period. Operating profit before exceptional items--a key metric of business performance--fell 5.3% to GBP1.26 billion from GBP1.33 billion.

Revenue rose 6.5% year-over-year to GBP7.61 billion, in line with forecasts.

Write to Simon Zekaria at simon.zekaria@wsj.com

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