Australia will have four major media players instead of five when Fairfax Media and Nine Entertainment officially become one in a month's time.
The competition watchdog ruled on Thursday the $4 billion merger can go ahead, after examining more than 1000 submissions, along with documents it had demanded from the pair of companies.
The Australian Competition and Consumer Commission has found the merger will likely reduce competition in the nation's news content market - but not enough to break the law.
With Fairfax set to take on the Nine name when the companies combine, the step will reduce the number of big media players to four: Nine, the Seven Network, News Corp and the ABC.
ACCC chair Rod Sims said on Thursday that would "exacerbate the problem" of media ownership concentration in Australia.
But he said new media outlets such as Buzzfeed and The Guardian have been entering the market and will help counterbalance that loss.
"If you talk to people about how they get their news now, it's from a wider range of sources than we have ever had before," Mr Sims told reporters in Melbourne.
Mr Sims said it is "just unclear" how Fairfax will look after it combines with Nine, taking on the latter's name.
But former Labor prime minister Mr Keating is certain things aren't heading in a good direction, accusing the ACCC of consigning key Fairfax mastheads to the "ethical dustbin of Channel Nine".
The Media, Entertainment and Arts Alliance is also concerned the ACCC's approval will reduce coverage of matters of national interest.
The merger is expected to be formalised by December 10.
But that will depend on it being approved by Fairfax shareholders at a November 19 meeting and the courts on November 27.
The merger comes after media ownership laws were changed in October 2017, allowing a proprietor to control more than two-out-of-three platforms - TV, radio or newspaper - in one licensed market.
Australian Associated Press