The bid for the British company by Murdoch's 21st Century Fox of £15.67 per share, valuing the company at £27 billion fell far short of Comcast's bid of £17.28 per share, valuing Sky at over £30 billion.
The announcement came after a day-long secret auction conducted by Britain's Takeover Panel, in which bidding went to the maximum three rounds.
At the Central London HQ of Robey Warshaw, one of the Comcast advisers on the bid, businessmen emerged shortly after the 7pm announcement declaring 'victory'.
Sky's independent directors last night recommended Comcast's bid to shareholders, who will have to vote to approve the deal.
Brian Roberts, chairman and chief executive of Comcast, said last night: 'This is a great day for Comcast. We couldn't be more excited by the opportunities in front of us. We now encourage Sky shareholders to accept our offer.'