Rupert Murdoch's elder son is trying to secure new funds for a A$3.3 billion (£1.65 billion) buyout of Australia's second-biggest media group after his financial backer pulled out.

Lachlan Murdoch has been in the United States talking to several parties to try to salvage his joint bid with James Packer for Consolidated Media Holdings (CMH), his first big deal since stepping down two years ago from a high-profile role in News Corporation, parent company of The Times.

SPO Partners, which invests on behalf of a small group of rich American families, is thought to have flinched at a combination of high debt levels in a key free-to-air television asset, a lack of available debt and an appreciation in the Australian dollar that makes the deal more expensive.

The board of CMH, which is controlled by Mr Packer, was thought to have suspended a decision about whether Mr Murdoch would be granted an extension of two to four weeks to the due diligence period, which ended on Wednesday. However, CMH said that it could not give any assurance that Illyria, Mr Murdoch's private company, would be successful.

A source close to the deal told The Australian: “Liquidity has just about been turned off in the northern hemisphere, while in Australia, the cost of debt is going up. The double whammy was the currency. The [Australian] dollar, where it is now, just makes the deal that much more expensive.”

Trading in CMH was halted yesterday, only days after Mr Murdoch hosted his SPO backers in Australia and introduced them to senior figures in the businesses in which it is invested.

CMH's assets include a 25 per cent stake in PBL Media, a private equity vehicle that owns the underperforming Nine Network and a string of magazines. It also owns a quarter of Foxtel, the pay-TV company, and half of a pay-TV sports broadcaster.

The principal main interest, a 27 per cent stake in Seek.com.au, an online recruitment company, would be sold. Illyria and Consolidated Press Holdings (CPH), the private vehicle of Mr Packer, heir to the Packer media empire, plan jointly to hold CMH in a 50-50 venture.

Mr Murdoch, 36, would become executive chairman, returning to executive ranks after the expiry of a two-year non-compete clause agreed as part of his departure from News Corp in 2005. He remains a director of News Corp.

CMH released a letter from Mr Murdoch about the funding collapse in which he said that Illyria remained enthusiastic about its indicative proposal, made seven weeks ago.

“Illyria has received strong preliminary indications of willingness to replace SPO's funding commitment to the Illyria joint-venture entity,” he said. “Illyria has impressed on these financiers the need to be able to conclude the arrangements in an abbreviated time period.”

Mr Packer, who owns 37 per cent of CMH, has stepped aside as deputy chairman. The bid would result in him raising his stake to 50 per cent and marks a reversal of recent moves to sell his media interests.

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