The market is sceptical that News Limited will be trumped in its attempts to buy James Packer’s Consolidated Media and return to control of all of Fox Sports and half of Foxtel that it had before the Super League settlement 15 years ago.

ConsMedia shares ended at $3.38 yesterday, down on the $3.50 suggested offer price from News, which tells us investors don’t see any rivals. That might be true, but the bid still has several obstacles to overcome, the most important being: what does Kerry Stokes want? He owns just over 24% of ConsMedia and is sitting on a profit of about $200 million. But he has always fancied a return to pay TV to make up for the bitter disappointment of the C7 case, which he lost to a phalanx of opponents including News, ConsMedia, Foxtel and Telstra. Stokes, by not accepting the offer, if it is made, can sink the bid because News wants 100% control.

In fact, once it clears the regulatory hurdles, the takeover bid can’t happen without Stokes’ approval. The reports yesterday and this morning gloss over Stokes’ role and the options available to him. Stokes can bid with his 24.4% stake, plus Stokes can sell his large investment portfolio and finance the rest with the debt. The downside of that is the cost, the extra debt burden and the fact that ConsMedia’s stakes in Foxtel and Fox Sports are passive with no management input.

Stokes can also depend on the growing concern at News and Foxtel/Fox Sports that their share of the rugby league broadcast contract could be reduced if Seven and or Ten or Nine (in some combination) manage to grab more than the three games a week that Nine has for FTA broadcast. Fox Sports and News are becoming worried that the push by the Rugby League Commission for Saturday afternoon and evening games on free-to-air TV (Saturday is pay-TV’s best night for audiences, thanks to league and then AFL) will see games taken away from Fox and awarded to Ten, Nine or Seven.

In addition to that, there are several other hurdles that explain why this offer won’t go live (if it does) until late this year.

The offer is conditional, so it is really an indication of intent. Watch the current battle for control of the TV rights (and internet) for rugby league. The decision by the Commission could very well determine if this deal happens or is aborted. Watch also the Optus Now appeal to the High Court on its cloud TV for sports broadcasts on the internet. If leave is granted to appeal and Optus gets a favourable decision, then all sports rights in the country could very well be undermined, including those held by Fox Sports and Nine (as well as Seven).

There are several conditions to be met, the most important being News Corp board approval. I find it pretty odd that Kim Williams hasn’t got the tick for the bid (and the money) from the News Corp board, especially seeing how Rupert Murdoch is chairman of News Ltd and News Corp (where he is also CEO). Williams didn’t ask the chairman if it was OK? You’d have to think the News Corp board will cough up the loot and approval, otherwise rejection would indicate a loss of confidence in Williams and possibly see his departure. It is a very odd way to do business.

Could it be that the desire to make a bid for ConsMedia (once the long list of conditions are met) was communicated to the market yesterday to soften the blow of the job and cost cuts at News? A diversion. In the same vein, the purchase of Business Spectator can be seen as a form of deflection (investing while cutting) of attention, especially from those at News losing their jobs.

The rest of the conditions, as briefly detailed by ConsMedia, are more problematic for News Ltd. These are: News Corporation board, FIRB and ACCC approvals; there being no material adverse change to CMH’s business; News having a period to undertake due diligence on an exclusive basis and News being satisfied that it will have no post-completion obligations in respect of certain CMH liabilities. News also requires the ACCC and FIRB approvals and other conditions be satisfied before entering into a scheme implementation deed.

These are standard in takeovers, but the ACCC is the sticky one. News also controls 50% of Fox Sports Australia and will move to 100% control (it has had management control) and it will move to 50% from 25% of Foxtel. It already has management control of Foxtel.

This will involve some sort of deal with Telstra if News tries to consolidate the Foxtel stake owned by CMH into one 50% block. There are pre-emptive rights over the Foxtel shares, but they are not triggered if News buys CMH shares and leaves the Foxtel stake in that company.

The ACCC’s attitude will be interesting. It already has approved (after a tortuous deliberation) the $2 billion Foxtel bid for Austar, and it warned Telstra off trying to expand its stake in Foxtel by bidding for ConsMedia. Telstra has looked but decided not to be interested in the struggling Nine Entertainment group whose major asset is the Nine Network. But it will become cheaper to buy if it goes into administration in the next few months.

But this bid won’t happen in a formal sense for months. In fact it could be the battle over the NRL TV rights that determine if the deal will happen, and at what price. That’s why the most important condition of all in those mentioned in the CMH statement is: “There being no material adverse change to CMH’s business.”

These are believed to relate to the NRL TV rights which are currently up for grabs. Nine has the current FTA rights and Fox Sports has the pay TV rights. They are very valuable for both, especially for Fox Sports (and Foxtel) because rugby league is the biggest audience puller on pay TV. Pay-TV (ie: ConsMedia, Foxtel, Fox Sports and News) all need these rights. If they are somehow diminished in any way in value by Seven or Ten getting a share of the games, the value of the entire pay-TV edifice being erected by News (especially the $2 billion takeover of Austar) will be undermined.

These rights won’t be settled for months, and until they are finalised there will not be a formal bid from news for CMH. Suddenly the new Rugby League Commission is the most important group in this deal. It is not mentioned in the statements today, and yet its final decision will effectively reshape the Australian media landscape. There is no love lost between the Commission and News Ltd. The irritation is growing at News in fact.

Could the price for Stokes’ acceptance be a share of the rugby league broadcast contract for the next five years? That would be a bitter pill for News to swallow and sweet justice for Stokes after C7.

PS: the Super League settlement saw Lachlan Murdoch agree to sell 25% of Foxtel and 50% of Fox Sports to the Packer empire. Besides cash received, News Ltd was allowed to invest in One.Tel, and we know how that ended for Lachlan Murdoch (and James Packer) …