Does James Packer have the guts to challenge his Foxtel partner, Telstra, and perhaps News Ltd, and launch a bid for the regional pay-TV operator, Austar?

That course is open to him after the collapse of talks between Foxtel and Austar. Telstra scuppered the takeover talks when it baulked at paying any more than $1.70 a share for Austar, when the major shareholder, US media mogul John Malone, wanted around $2 a share.

News Ltd and PBL were interested — and remain interested — in doing a deal closer to the $2 a share Malone has demanded, but Telstra and its American management has asserted its 50% stake and refused to contribute to any takeover.

Austar said on Friday:

Austar notes this morning’s article in The Financial Review and confirms that discussions with Foxtel regarding a potential transaction have terminated. Other third-party discussions continue but remain preliminary and incomplete.

Now it is up to PBL/Cons Media to launch a bid, if it can get approval from News and convince Telstra not to oppose it.

PBL/Cons Media, its new media arm, needs a cash flow/revenue producing vehicle as all it will have is a series of high-value, low-cash-producing investments in Foxtel, Seek, PBL Media and Premier Media Group.

Citigroup said this morning that it was estimating that Cons Media would only have $200 million in cash when the split comes. It said $725 million from selling another $25% of PBL media and selling Ticketek and the Acer Arena interests to PBL Media would end up in PBL and probably in Crown, the gambling business.