Media giant News Ltd has been mulling the sale of its stake in New Zealand's Sky TV, sources say, as private equity funds scoped out a takeover scheme.

Speculation about News' potential exit emerged after long-term Sky shareholder Todd Communications sold its 11.1 per cent stake this month for $5.05 a share, a discount to the then market price of $5.36.

One market source told BusinessDay there had been talks about a joint sale by Todd and News, owner of a 43.7 per cent stake.

"A party had approached News and Todd to buy their combined stake off them, essentially to look at taking it over," said the source, who asked not to be named.

"They went a long way down the track with due diligence, but ultimately decided the business was worth less than the market [price]. They'd have bid $4, $4.50 or something like that.

"The discussions were in abeyance, then all of a sudden Todd decided to break ranks and get out of there."

Sky TV managing director John Fellet said he had not heard of the buyout scheme.

"No-one's come in asking to do due diligence," he said. "No-one's come to Sky and said ‘we are looking to buy an interest'."

Sky TV independent director Robert Bryden, a former managing director of Todd Capital, said he was "not aware" of any joint sale proposal.

News Ltd director Michael Miller, who serves on the Sky board, did not respond to an email seeking comment.

One analyst, who asked not to be named, said News Ltd was reviewing its assets.

"They're going through a process now of what's core and non-core," he said. But its plans did not necessarily require disclosure.

"It'll come down to materiality. People are always having discussions round the edges, kicking tyres and the rest of it. You can't go as far as to say there's a disclosure issue."

The market source said in his view the potential exit of News was useful information.

"The thing Todd knew that no-one else knew was that News Corp was potentially looking to get out as well.

"I think Todd took the view they might have been able to sell their stake at a price close to market, but once News leave it's got a huge signalling effect."

In Australia, News owns 50 per cent of pay TV company Foxtel after buying out 25 per cent owner Consolidated Media this year. The other half is owned by Telstra.

In June, News Ltd parent News Corporation announced plans to split in two, creating separate publishing and entertainment businesses.

News Ltd's newspaper and information businesses in Australia will be part of the publishing group, but it is not clear how Sky in New Zealand will fit into the entertainment group, which News has said will comprise its film and TV assets as well as its pay TV units in Europe and India.

Sky TV shares closed up 1c on the NZX yesterday at $5.07.

- © Fairfax NZ News