As James Packer decides who he should sell his $1 billion controlling stake in Consolidated Media Holdings to, News Corporation and Telstra have every reason to feel aggrieved.

CMH has appointed UBS to run a professional and independent sales process, yet we read in the Saturday papers that Packer spent the weekend staying with Kerry Stokes in Broome.

Stokes has long aspired to avenge his defeats in the C7 pay-TV wars by securing a decent slice of Australia’s pay-TV market to supplement his one-third stake in free-to-air television through the Seven Network. The death of Kerry Packer in 2005, the retirement of Ken Cowley from the News Corp board last October, the axing of veteran News Ltd CEO John Hartigan and the sideling of Lachlan Murdoch within the broader News Corp power structures means that many of Stokes’ key antagonists from Australia’s most expensive legal battle are no longer on the scene.

Shortly before publicly abusing Seven Network CEO David Leckie in October 2009 following a series of hostile Today Tonight attacks, James Packer made peace with Stokes by inviting his son and key lieutenant Peter Gammell inside the CMH board room. This was a peace deal brokered by UBS, the same investment bank that also arranged the $5.5 billion sale of PBL Media to CVC in 2006.

Telstra has reportedly pulled out of the bidding for CMH, even though it has the cash and would love to increase its stake in Foxtel from 50% to 75% and secure a key 50% stake in Fox Sports.

Packer’s subservience to Stokes was demonstrated when he parted company with Lachlan Murdoch and resigned from the Network Ten board last year after Rupert’s eldest son poached Seven’s James Warburton to run Ten. Stokes was furious with the move and litigated and Packer’s sudden resignation signalled his desire to keep sweet with Stokes.

Another tell-tale sign of warm relations between Stokes and Packer is the fact that Leckie has been on leave for the past nine weeks and may never return to the top job at Seven West Media.

Media moguls have been known to sack journalists and executives as part of broader deals. Indeed, a former CEO of Network Ten once told me that Michael Pascoe was sacked from Channel Nine at the behest of Rupert Murdoch as part of some wider arrangement between the Packers and News Corp.

Assuming that Leckie has been punted by Stokes to please his nemesis Packer, the bigger question remains whether Stokes can raise the $1 billion in cash needed to make a full bid for CMH. CMH has no debt and Stokes’ 67.8%-owned Seven Group Holdings already owns 137.3 million shares or 24.44%, which cost about $2.60 a share or just under $400 million.

However, it was only a few weeks back that Seven Group Holdings shelled out $US400 million to Caterpillar extending its WesTrac franchise business across Australia, lifting its overall debt to about $1.8 billion.

Given that Foxtel has just been leveraged courtesy of the $2 billion Austar acquisition, it is hard to imagine banks agreeing to further leverage Seven Group Holdings when its largest media investment, a 33% stake in Seven West Media, is also labouring under the weight of a $2 billion debt.

Following the emergency $200 million capital raising by Network Ten last week and the shock April 24 profit downgrade from Seven West Media, there is gathering talk that Stokes will need to support an equity injection into his debt-laden free-to-air television business.

What is not known is the amount of debt that Stokes is personally carrying to support such a move. Based on Friday’s close of $7.62, his controlling 67.8% stake in Seven Group Holdings is worth $1.58 billion. BRW last month estimated his total worth was $2.79 billion, but this is now looking over the top.

With shares in CMH closing at $3.04 on Friday, an offer of about $4 to Packer and the minority shareholders would be expected to succeed. If the ACCC is making noises about Telstra having market dominance problems in bidding for CMH, I’m struggling to see why  Stokes and Murdoch wouldn’t be facing a similar dilemma.

The upcoming bidding war for rugby league television rights will provide an interesting insight into the increasing collaboration between the likes of Stokes, Rupert Murdoch, Network Ten chair Lachlan Murdoch, Packer and his best man David Gyngell, who runs the existing NRL free-to-air rights holder, Nine Entertainment Group.

Seven and Foxtel now appear to have overpaid for the AFL rights. The decision by the new independent commission running rugby league to sack News Ltd loyalist David Gallop after attending Sarah Murdoch’s 40th birthday party signals that they are determined to remove conflicts of interest and maximise competitive tension for the rights. But with Packer planning his exit from pay-TV, it remains to be seen who will be at the NRL negotiating table when final bids are submitted.

At one level, Packer owes the Murdochs plenty, courtesy of the money they dropped on One.Tel and Super League. Ironically, the Super League peace deal — Packer getting 25% of Foxtel and 50% of Fox Sports — has proved to be hugely lucrative. But does that mean Packer should upset Stokes by doing a sweetheart deal with News Corp?

If there’s one thing Packer hates, its mass market media harassment. When Today Tonight and The Daily Telegraph went after him, it really hurt.

So who will he decide to upset when the CMH stake is sold? Watch this space for a final fascinating chapter in the roller-coaster “war then peace then war” soap opera of Australian media mogul dealings.