Fairfax Media will be absorbed by Nine Entertainment by the end of 2018 in an historic deal the companies say will create Australia's largest integrated media player, with a combined value of $4.2 billion.

It represents the first major transaction since the Turnbull government secured changes to cross-media ownership rules in 2017, and will result in the Fairfax name disappearing from corporate Australia after 177 years.

Under the deal, Nine will gain control of Fairfax mastheads including The Sydney Morning Herald and The Age, the remaining 50 per cent of streaming platform Stan it didn't already own, plus Fairfax's 60 per cent stake in real estate portal Domain and its radio interests through Macquarie Media. Fairfax is the publisher of this website.

The companies said they expected the merger to deliver annualised cost savings of at least $50 million over the next two years. On a call with analysts, Nine CEO Hugh Marks said most of these savings would come from support functions, rather than content creation.