Another day, another blow to the world’s most powerful media empire.

Suggestions that the Murdoch-managed Foxtel would be given an easy ride in buying Austar for $2.8 billion and creating an Australian pay-TV monopoly have been dashed today by a suddenly alert ACCC.

The market was certainly shocked. Foxtel bid $1.52 a share for the regional provider in May, valuing the equity at about $2 billion, on top of Austar’s existing $800 million debt. The stock closed yesterday at $1.295, a 15% discount to the offer price which clearly reflected some regulatory risk.

However, Austar released this statement from the ACCC to the ASX this morning and the stock promptly slumped almost 20% to a low of $1.045. The original four page statement of issues released by the ACCC on May 31 closed off submissions by June 16.

Alas, today we got a much expanded new statement of issues running to 18 pages which triggered a re-opening of public submissions until August 11 to consider a wider slate of competition concerns. The final decision has now been deferred until September 8.

This has shades of News Corp’s BSkyB takeover where imminent approval suddenly became regulator delay and then complete withdrawal. The regulatory environment has sudden become quite hostile to News Corp which in Australia will no longer have Foreign Minister Kevin Rudd or outgoing ACCC chairman Graeme Samuel able to meaningfully support its expansion plans.

Rudd has been stripped of authority to award the $223 million Australia Television contract and is now out of action for two months having heart surgery. Communications Minister Stephen Conroy is expected to strongly back the ABC ahead of the Murdoch-associated Sky News is this shoot out.

Like Rudd, Samuel was also considered a supporter of News Corp, but his term finishes on July 31, so he will be well and truly out the door by the time the ACCC makes a final decision on the Austar takeover.

With Julia Gillard looking around for ways to deal with the power-abusing News Corporation media machine in light of the phone hacking scandal and the hysterical attacks on her carbon trading policy, there is an obvious argument for good governance which could be pursued.

The Murdoch family are coming under increasing pressure to end News Corp’s dual-class voting structuring which gives them a 39% voting stranglehold over a company which is 87% owned by non-Murdoch investors.

Business Spectator’s Stephen Bartholomeusz was pessimistic yesterday about the prospects of some US investors, led by CALPERS, having any success. However, Rupert Murdoch’s brazen refusal to accept any personal responsibility for the phone hacking scandal has significantly cranked up the pressure for change to his gerrymander.

And there’s a very simple tool that any government in Australia, the UK or the US could deploy to force change on the undemocratic Murdochs.

Simply modify media regulation to require the ultimate controlling shareholder entities for “significant” media to adopt best practice corporate governance standards.  Define best practice corporate governance so it prohibits dual shareholding structures.

This goes to the heart of what many see as the problem with News Corp and avoids trying to further regulate media conduct which is a slippery slope.

The lesson from GFC and phone hacking scandal is that good corporate governance of major businesses such as banks and large media organisations is not just a shareholder issue but affects the broader public interest, often in other jurisdictions.

I put up a shareholder resolution at the 2007 News Corp AGM in New York which proposed eliminating the dual class voting structure and it was supported by 60% of the independent shareholders, who voted $5 billion worth of voting stock in favour, despite strong opposition from Murdoch’s hand-picked directors.

Whilst gerrymanders are common place in the US, British investors are also strongly opposed and there would be support if Labour and the Liberal Democrats pushed through a change in Britain that also required publically listed media companies to embrace “one value one value” principles. If this happened the Murdoch family would have to decide between withdrawing from some investments or cleaning up its governance structure.

It is unclear what precise conditions the ACCC may impose on Foxtel’s Austar deal but a sensible outcome would be to complete a three way merger between Foxtel, Fox Sports and Austar and then publically float the combined operation with a condition that News Corp surrender its existing management agreement which is gives it control of Foxtel.

If you added in the bonus of requiring News Corp to ends its Murdoch gerrymander, the family’s governance, ethical and power excesses may be partially curbed, and that would be good for Australian democracy.