The media mergers that will flow from changes to the cross-media ownership laws are already starting with reports that Fairfax will take a strategic stake in the Ten Network, as Freddy Krueger explains.

Kerry Packer’s worst nightmare? Rupert Murdoch isn’t interested? Who knows, but it’s all move and countermove, gossip and suggested story. Whatever it is, the games have begun in the great Australian media ownership shuffle, and the new laws haven’t even hit Federal Parliament yet.

News in The Australian today that the Asper family of Canada was hawking its controlling stake in the Ten Network round to News Ltd and John Fairfax, is the first of the moves to surface.

It does make sense. the Asper’s have an asset with a complicated ownership structure, but it has considerable upside, even at these high prices it is the most profitable TV business of the three major networks.

Linking it to either Fairfax or News Ltd does make sense, especially in cross media promotion like that achieved by the Packers between Nine, ACP, Crown, and Ninemsn.

But News Corp is stymied for the moment because it is now a foreign company and faces greater restrictions on owning Australian TV assets, even when the cross media laws are changed in the Senate after July 1.

Here’s how the story was initially analysed today on the Fairfax websites, with Fairfax not ruling out an acquisition, or ruling it in.

This story examines the possible regulatory hurdles to be overcome. They are not that onerous, so long as the cross media laws are changed without any modification in the Senate.

So why could it be Kerry Packer’s worst nightmare?

Providing the Fairfax management was revitalised (and Ten chairman Nick Falloon is the man for the job) and the precious board of Fairfax butts out once the deal is done, then a Fairfax-Ten marriage would be the ideal combination. A bit like the time News Corp owned the Ten Network in the 80s.

Having two major newspapers, a host of suburbans and regionals in NSW and Victoria, and the out of home business of Eye Corp to promote Ten (and promote the Fairfax papers) would be a cross marketers dream.

And with his time at PBL and at Ten, Falloon, who owns 7.5 million Ten shares and is a Top 20 shareholder, would know what to do, who to get to do it and where to exploit and attack the opposition.

It would further marginalise the Seven Network which only has the small Pacific Magazines business.

The might of PBL and the Packers would at last have a formidable media competitor that was more focused than the Park Street mob, which is now moving more deeply into gambling here and in Asia. If there was a merger of Fairfax and Ten, could the Packers be prompted to split their gambling and media assets into two companies to allow better focus?

Ten already has the lowest costs and the highest profit margins of the three main big city commercial networks.

At the moment Fairfax has nothing viable in the way of cross promotion platforms. But having the Sydney Morning Herald, Sun Herald, the Newcastle and Illawarra papers, the Australian Financial Review, The Age and Sunday Age, plus the regionals and suburbans, would make the combined company a much tougher competitor for PBL and a better prospect for advertisers to deal with.

Buying ads and doing deals with major clients would be made much easier with a one stop sort of approach (and with Eye Corp on board, even better).

Offering Toyota or Woolworths of Coles Myer a package of advertising deals in various papers in NSW and Victoria, plus on Ten Network stations (and the same for Coca Cola and Pepsi) would see the combined companies following PBL down the same route of maximising revenue and profits through cross platform deals.

That’s why it could very well be the Packer’s worst nightmare. But being them, they’d expect the culture of failure that stalks Fairfax to trip them up, but not if Nick Falloon was given the freedom to manage.

With Roger Corbett, Ron Walker and Dean Wills on the board there are too many people who think they know the media, but who don’t have too many clues about how to make money from it.

For Fairfax, buying Ten would also offset the continuing drain out of its classifieds to the internet and places like the Packer-associated seek.com.

It is a better and smarter fit than being absorbed by Telstra and its Sensis arm, or buying West Australian Newspapers, which is now in bed with the Packers through joint ownership of Hoyts.

Free to air TV viewing is declining thanks partially to Pay TV and the internet and the amount of time Australians work, especially people under 35.

But with Ten having a lock on the 16 to 39 demographic, and with that fleet of very promotable programs like Australian Idol, X Factor and Big Brother, a marriage to the grannies at Fairfax has considerable merit.

Fairfax’s readers are old and dying faster than they can be replaced, according to some wits at the company. Owning Ten with its focus on the 16 to 39 age group would allow for the readership of its papers to be replenished.

That makes it a sort of obvious deal, but somehow you can’t have too much confidence in the present board and management of Fairfax fully seeing the strategic nature of this deal and the need to get it at all but a stupid price.

Meanwhile, the marriage of Ten to News Ltd would have made even more sense, given the fleet of tabloids in Rupert’s Australian stable. But just because News can’t or won’t do it at the moment does not indicate News won’t make a grab for a TV network, like Seven or Ten, or even Nine.