Kerry Stokes will lose his bid for permission to buy pay-TV group Consolidated Media, industry experts believe, after the competition watchdog flagged concerns about the proposal.
The media magnate will now have to decide whether to sell his ConsMedia stake to suitor News Corporation or stay on as a minority investor, analysts say.
In a statement yesterday, the competition regulator said it was concerned about the impact of Mr Stokes' proposal on the bidding process for sports rights.
The Australian Competition and Consumer Commission delayed its decision on Mr Stokes' proposal, calling for further submissions.
Mr Stokes has sought the watchdog's approval to make a counter bid for ConsMedia, which owns a quarter of Foxtel and half of content provider Fox Sports.
He would make the bid through his media and mining company Seven Group, which owns about 25 per cent of ConsMedia. Mr Stokes owns 67 per cent of Seven.
The ACCC said its concerns centred on "the influence Channel 7 may be able to exert over Fox Sports ... in joint bids and other commercial arrangements in relation to sports rights".
It said that if Seven owned half of Fox Sports, it would have "significant influence" over the pay-TV channel, which would potentially favour Seven over rival free-to-air networks.
James Packer, who owns half of ConsMedia, supports the $2 billion takeover offer tabled by News Corp, publisher of the Herald Sun.
Greg Fraser, a senior analyst at research house Fat Prophets, said the ACCC's statement indicated it would be difficult for the ACCC to approve a rival takeover proposal by Seven. "The only real question that remains open is what will Seven do with their holding in Consolidated Media once the ACCC knocks it back," Mr Fraser said.
Speaking before the ACCC released its statement, Argo Investments chief Jason Beddow said, "If Stokes is going to do anything with his stake or push his leverage, he'll have to play his hand".
The investment firm is a ConsMedia shareholder. News formalised its offer for ConsMedia last week. ConsMedia shareholders are due to vote on the deal at the October 31 annual meeting.
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