Prime Minister Malcolm Turnbull has welcomed the announcement of a takeover of Fairfax Media by Nine Entertainment, affirming the merger was only possible because of media ownership reforms he made last year.

The Labor opposition, however, has expressed fears about greater concentration of media ownership and the job losses which it said would "inevitably" flow from a merger of the two media houses.

In one of the biggest shake-ups in Australian media history, Fairfax chief executive Greg Hywood announced a deal in which Nine would own 51.1 per cent of the new entity under the Nine brand, while Fairfax Media - publisher of The Sydney Morning Herald and The Age - would cease to exist.

Mr Turnbull, a former journalist and media lawyer who relaxed media ownership regulations last year, said the proposed merger would make both companies stronger in a competitive market.