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Federal Court of Australia |
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. 100 of 1997
)
GENERAL DIVISION )
BETWEEN: NINE NETWORK AUSTRALIA
PTY LTD
Applicant
AND: AUSTRALIAN BROADCASTING AUTHORITY
First Respondent
FOXTEL CABLE TELEVISION
Second Respondent
JUDGE MAKING ORDER: LOCKHART J.
DATE ORDER MADE: 25 FEBRUARY 1997
PLACE ORDER MADE: SYDNEY
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
Broadcasting Services Act 1992 : s. 115, Schedule 2 condition 10(1)(e).
NINE NETWORK AUSTRALIA PTY LTD v AUSTRALIAN BROADCASTING AUTHORITY, FOXTEL CABLE TELEVISION
NG 100 of 1997
LOCKHART J.
25 FEBRUARY 1997
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. 100 of 1997
)
GENERAL DIVISION )
BETWEEN: NINE NETWORK AUSTRALIA
PTY LTD
Applicant
AND: AUSTRALIAN BROADCASTING AUTHORITY
First Respondent
FOXTEL CABLE TELEVISION
Second Respondent
25 FEBRUARY 1997
Introduction, facts and statutory provisions
This case raises questions of construction and application of what are called the `anti-siphoning' provisions of the Broadcasting Services Act (Cth), in particular s. 115 and condition 10(1)(e) of the conditions applicable to subscription television broadcasting licences (set out in Part 6 of Schedule 2 to the Act).
Section 115 relevantly provides:
'(1) The Minister may, by notice published in the Gazette, specify an event, or events of a kind, the televising of which should, in the opinion of the Minister, be available free to the general public.
(1A) The Minister may, by notice published in the Gazette, amend a notice under subsection (1) to specify an additional event, or events of a kind, the televising of which should, in the opinion of the Minister, be available free to the public.
(1B) Subject to subsection (2), an event specified in a notice under subsection (1) is taken to be removed from the notice 168 hours after the end of the event, unless the Minister publishes in the Gazette before that time a declaration that the event continues to be specified in the notice after that time.
(2) The Minister may, by notice published in the Gazette, amend a notice under subsection (1) to remove an event from the notice.
(3) ...'
Condition 10(1)(e) provides that each subscription television broadcasting licence is subject to the condition that:
'(e) the licensee will not acquire the right to televise, on a subscription television broadcasting service, an event that is specified in a notice under subsection 115(1) unless:
(i) a national broadcaster has the right to televise the event on its broadcasting service; or
(ii) the television broadcasting services of commercial television broadcasting licensees who have the right to televise the event cover a total of more than 50% of the Australian population;'
By notice published in the Gazette on 6 July 1994 the Minister for Communications and the Arts specified events of a kind the televising of which should be available free to the general public. All events so specified were sporting events and included certain cricket events conducted during the period commencing on 6 July 1994 (the date of gazettal) and ending at the end of 31 December 2004. The cricket events specified were each `Test' cricket match involving the senior Australian representative team selected by the Australian Cricket Board, whether played in Australia or overseas; and each One-Day cricket match (including World Series Cricket Matches) involving the senior Australian representative team selected by the Australian Cricket Board, whether played in Australia or overseas, and each World Cup One-Day Cricket Match.
By letter dated 20 December 1996 the applicant, Nine Network Australia Pty Limited (`Nine') requested the first respondent, Australian Broadcasting Authority (`the Authority') to investigate the circumstances of the acquisition, if any, of rights to the Tests and One-Day International Matches comprised in the South Africa v Australia Cricket Series due to start in February 1997 in South Africa and whether the rights to the matches had been acquired by the second respondent, Foxtel Cable Television Pty Limited (`Foxtel Cable') or any other person in contravention of the Act or the licence condition clause 10(1)(e) of the Act.
The proposed itinerary of the South African matches shows that the first Test is to commence on 28 February 1997 in Johannesburg and the first one-day match is to be held on Saturday, 29 March in East London. Three tests are involved and seven one-day international matches, the last of which is to be held on Sunday, 13 April 1997.
By letter dated 24 December 1996 News Limited (`News') wrote to the Chief Executive of the Seven Network Limited (`Seven') confirming an agreement between News and Seven that Seven was granted `the exclusive Australian free-to-air television rights to the international matches ... to be held in South Africa during the 1997 Australian Cricket Team tour of South Africa' on the basis that certain fees described as `rights fees' were payable as consideration for the services to be performed under the agreement. The events were the three Test matches and seven One-Day matches previously mentioned. The `rights' were described as follows:
'3. RIGHTS
Exclusive free-to-air television rights to full coverage of each Test and each One-Day Match on a delayed telecast basis, including the right to sub-licence to members and affiliates of the Seven Network.
Exclusive free-to-air television rights to telecast a one-hour highlights programme for each day of each Test Match and each One-day Match including the above right to sub-licence.'
The licence period was described as one year from the date of the agreement, but limited to three runs, including excerpt rights. The territory was described as Australia; and under the heading `8. Coverage' the following appears
'(a) The Seven Network to have exclusive free-to-air rights to each One-Day Match. The Seven Network is not obliged to telecast those matches.
(b) Seven must not commence its telecast of any One-Day Match earlier than 3 months after the end of the relevant One-Day Match.
(c) The Seven Network to have exclusive free-to-air rights to each Test. The Seven Network is not obliged to telecast those matches.
(d) The Seven Network must not commence its telecast of a Test earlier than 3 months after the end of the last session of that Test Match.'
Thus the agreement between News and Seven conferred on Seven exclusive free-to-air television rights of the full coverage of each Test and each One-Day Match, on a delayed telecast basis of three months after the conclusion of each relevant match. Seven also acquired exclusive free-to-air rights to telecast a one hour highlights package for each day of each Test Match and each One-Day Match.
By letter dated 6 January 1997 from News to Foxtel Management Pty Limited (`Foxtel Management') `Foxtel Management' was granted:
`the exclusive Australian pay television to the international matches detailed in (2) below to be held in South Africa during the 1997 Australian Cricket Team tour of South Africa on the following basis ...'
Under the heading of `Rights Fees', fees were payable as consideration for the services to be performed under the agreement. The relevant events were the three Test matches to be played in South Africa and the rights were expressed as `exclusive pay television rights to full coverage of each Test on a live telecast basis and exclusive pay television replay rights'.
The licence period was one year from the date of the agreement but limited to three runs including excerpt rights. The territory was described as Australia.
Under the heading `8. Coverage' the following appears:
'Foxtel will have exclusive live television rights (against free- to-air and pay television) in the territory for each Test and Foxtel must procure the live broadcast of each of those matches in Australia by a cable platform.'
By letter dated 6 January 1997 from News to Premier Sports Australia Pty Limited (`Fox Sports'), News confirmed its agreement that Fox Sports was granted `the exclusive Australian pay television' to the seven One-Day matches to be held in South Africa, also on the basis of a fee payable as rights fees, with the rights described as `exclusive pay television rights to full coverage of each one-day match on a live telecast basis and exclusive pay television replay rights' with a licence period of one year from the date of the agreement, but limited to three runs, including excerpt rights; with the territory being described as Australia.
Under the heading `8. Coverage' the following appears:
'Fox Sports would have exclusive live television rights (against free-to-air and pay television) in the territory for each One-Day match and Fox Sports must procure the live broadcast of each of those matches in Australia by cable, MDS and satellite platforms.'
By letter dated 8 January 1997 the solicitors for News wrote to the Authority informing it of the acquisitions mentioned above.
By letter dated 9 January 1997 from the Authority to the solicitors for News ,the Authority requested copies of the relevant agreements. The agreement with Seven was provided on 10 January 1997 and the two agreements with the Foxtel companies were provided on 13 January 1997.
The letter from the Authority also noted that the free-to-air coverage of the relevant events would be limited to the `highlights package' as Seven did not intend to exercise the delayed rights that it had acquired.
Discussions were held between officers of the Authority and the solicitors for News where the Authority expressed concern about the extent of the three months delay from the conclusion of each cricket match until Seven was entitled to televise it, the Authority's concern being that this could be perceived as `undermining the policy intent of the anti-siphoning rules'. Again it was made plain by the solicitors for News to the Authority that from Seven's point of view the delay `made no difference as the broadcaster only intended to broadcast highlights, given the timing of the event'.
By letter dated 17 January 1997 from News to Seven it was recorded that News and Seven had agreed that paragraph 8(b) and 8(d) of the original letter of 24 December 1996 had been amended by substituting `168 hours' for `three months'. Hence the delay period was telescoped from three months to, in essence, seven days, interestingly, the very period specified in s. 115(1B) of the Act as the currency of the operation of a notice given by the Minister under s. 115(1) with respect to a particular event after the end of that event.
By letter dated 20 January 1997 from Seven to News the amendment to clauses 8(b) and (d) was confirmed only so far as the full coverage of the matches is concerned and does not affect highlights programmes.
On 30 January 1997 Nine made a formal complaint to the Authority pursuant to s. 147 of the Act based on the belief expressed by it in its letter that `a pay television licensee may be breaching a condition of its licence', a reference to Foxtel Cable and a possible breach of condition 10(1)(e).
By letter dated 31 January 1997 to the Authority, Nine mentioned that it had heard for the first time that day by reading the Sydney Morning Herald that the Seven Network did not have rights for the live telecasts of the Tests or One-Day matches in the South African series, it previously having thought that Seven had been granted the full live rights to the televising of the matches, not simply the delayed rights. Again there was a reassertion of the view of Nine that there had been a breach of the licence condition by Foxtel `because Channel 7 had not acquired the substance of the rights'.
Further correspondence was passed between Nine and the Authority.
By letter dated 7 February 1997 from Foxtel Management Pty Limited to Foxtel Cable and signed on behalf of each company the following appears:
'This letter confirms that on the acquisition of Australian cable pay television rights by this company, your company automatically acquires such rights by way of a sublicence of such rights.
Such sublicence is granted in consideration of this company's entitlement to manage the business of your company, and has always been essential to enable your company to make representations about the content of services your company proposes to provide to its subscribers.
If you agree that the above correctly describes the long established arrangement between our respective companies for the management of your company's business, please confirm this by signing below.'
This was confirmed in the manner suggested.
It was argued by counsel for Nine, and not disputed by counsel for Foxtel, that the effect of this letter was that the rights acquired under the two letters of agreement 6 January 1997 were acquired in fact by Foxtel Cable so that it owned those rights as from 6 January 1997. In my opinion that submission is correct.
By fax of 7 February 1997 from the solicitors for News to the Authority, it was confirmed that Foxtel Cable had acquired from Foxtel Management the pay television rights granted to Foxtel Management by News by letter dated 6 January 1997.
By letter dated 11 February 1997 from the Authority to the solicitors for Nine, a copy of the results of the Authority's investigation into the matter was provided to Nine in accordance with s. 149 of the Act.
That document recited certain of the history of the matter and on page 7 the conclusion of the writer (Director, Programme Services Branch of the Authority being the appropriate delegate of the Authority) was expressed as follows:
'In my view the grant by News to Seven of the rights contained in the letter of agreement dated 24 December 1996 resulted in Seven having the right to telecast the Relevant Matches as described in clause 10(1)(e) of Schedule 2 to the Broadcasting Services Act 1992. These rights include free-to-air television rights to a full coverage of each Relevant Match on a delayed telecast basis and a one- hour highlights program for each day of each Relevant Match. Further details are confidential.
Without going into a breakdown of rights, the contracts provided by Allens indicate clearly that News did not grant the rights to the Relevant Matches to FOXTEL Management Pty Ltd and FOX Sports until the contract was concluded with Seven for free-to-air coverage of the entire events. Nor is there any question that Seven's services cover more than 50% of the Australian population.
FOXTEL Cable Television Pty Ltd, a subscription television broadcasting licensee has subsequently acquired the rights that were granted to FOXTEL Management Pty Ltd on 6 January 1997. The ABA is not aware of any change to the rights to broadcast the Relevant Matches acquired by Seven since 24 December 1996 and thus the ABA concludes that, at the time of acquisition of the rights to some of these events by FOXTEL Cable Television Pty Ltd, a subscription television broadcasting licensee, Seven had the right to telecast the Relevant Matches.
As I accept that the acquisition of the total package of rights to the events has resulted in Seven "having the rights", for the purposes of the anti-siphoning provisions, it is not necessary to consider whether the highlights package of an hour for each day's play would of itself constitute the substance of the right to coverage of the test or one-day matches respectively.'
The Decision was expressed in the document in these terms:
'I, Debra Richards, Director Program Services Branch, being the appropriate delegated officer of the Australian Broadcasting Authority, am satisfied that no subscription television broadcaster is in breach of a licence condition for acquiring the rights to televise the Relevant Matches contrary to clause 10(1)(e) of Schedule 2 to the Broadcasting Services Act 1992.'
In the document itself the following statements, amongst others, were made:
'Paragraph 10(1)(e) effectively prohibits the acquisition by a pay TV licensee of a right to broadcast an event listed in a notice made under .s 115(1) where a right to broadcast the listed event has not already been acquired by a free-to-air broadcaster. (my emphasis) (p 4)
...
The Minister's list is concerned with the televising of the event, whether live, delayed or perhaps substantially televised by a broadcaster of a highlights package. Clause 10(1)(e) applies on its face to any (my emphasis) right to broadcast the event, whether live or delayed.
Further, if a free-to-air broadcaster acquired "delayed" rights to broadcast an event, paragraph 10(1)(e) would not prevent a pay TV broadcaster acquiring live rights, or delayed rights equivalent to those acquired by a free-to-air broadcaster, to broadcast the same event.
This is consistent with the Explanatory Memorandum to Clause 113 of the Broadcasting Services Bill 1992 which states that:
This process should ensure, on equity grounds, that Australians will continue to have free access to important events. It will, however, also allow subscription television broadcasters to negotiate subsequent rights to complementary, or more detailed coverage of events (emphasis added).
The ABA does not consider that the legislation requires the ABA to differentiate between different kinds of listed events when determining whether, by reason of an agreement to acquire a particular package of rights, a broadcaster has the right to televise an event. To have to do so would create a great deal of uncertainty about the operation of the condition, and would mean the ABA would be required to distinguish some sports from others without express legislative power or guidance. (p 5)
...
The ABA Guide
The ABA has developed guidelines for the operation of these provisions in consultation with the free-to-air and subscription television industry. The Guide is intended to assist parties in conducting their business within the terms of the anti-siphoning provisions.
Relevant excerpts from the Guide which was published in October 1996, are as follows:
Paragraph 10(1)(e) of Schedule 2 does not distinguish between live and delayed rights. The licence condition relates to the acquisition of the right to broadcast and applies to any right to broadcast the event, whether live or delayed. The acquisition of "delayed rights" to a listed event by a free-to-air broadcaster is sufficient to allow the acquisition of either "delayed" or "live" broadcast rights by a pay TV licensee, without resulting in a breach of the licence condition by the pay TV licensee.
Whether or not the acquisition of a highlights package would constitute the acquisition of the right to the event within the meaning of paragraph 10(1)(e) of Schedule 2 of the Act is also dealt with in the Guide. At page 9 the ABA expressed the view that:
There may, however, be a contravention of these provisions if the delayed broadcast rights acquired by the free-to-air broadcaster did not constitute the right to broadcast all the event or the substance of the event, for example, if it was restricted to the right to broadcast only limited highlights.
The ABA recognised that in some instances a free-to-air licensee may be offered, or only wish to acquire, a right to broadcast highlights of the event. Whether the acquisition of highlights alone would constitute an acquisition of a right to broadcast the event has to be considered on a case by case basis (page 15 of the Guide). An example given in the Guide is the acquisition of the right to broadcast less than one hour of highlights of a day's play in a test cricket match between Australia and England. The Guide states that this would not represent acquisition of rights to the event.' (p 6)
Submissions of the parties
Counsel for Nine contended that the decision of the Authority that Foxtel Cable was not in breach of its licence condition was erroneous in law and stemmed from the misconstruction by the Authority of the licence condition.
It was argued that the paragraph appearing at the foot of page 4 of the Decision mentioned earlier demonstrated an error of law by the Authority because condition 10(1)(e) is not addressed to the acquisition of `a right' but of `the right to televise the event'.
It was also argued by counsel for Nine that the expression `any right' used by the Authority on page 5 of its decision is in error because it is not the same as `the right to televise the event' as appears from the condition itself.
It was submitted that the Authority was also in error in the similar respects in second last paragraph on page 5 and page 6 of the Authority's decision.
Counsel for Nine submitted that underlying these statements, and the approach of the Authority to its decision, was a fundamental fallacy namely, that during the period whilst the relevant matches (One-Day and Test Matches) are on the list gazetted by the Minister under s. 115 of the Act (namely, the period which ends 168 hours after the end of the relevant event, that is the relevant match), Seven has no right to broadcast the entire event at all because its right to broadcast is delayed until the end of that period. During the intervening 168 hours the only person who is entitled to televise the entire match is Foxtel Cable. Hence, Foxtel Cable breached the condition 10(1)(e) when it acquired its rights on 6 January 1997 to televise both the Test matches and the One-Day Matches, because at the relevant time (during the subsistence of the 168 hours), only Foxtel Cable had the right to televise anything except the highlights. It was argued that the right to televise the highlights was not the same as the right to televise the entire event, so that when Foxtel Cable acquired its right to televise the cricket matches there was no right vested in Seven to televise the events in Australia.
Counsel for Nine argued that the rights acquired by Foxtel Cable must, in order to satisfy the terms of the licence, be rights equivalent to or less than the rights to televise the event held by the free-to-air broadcaster, namely, Seven.
It was also argued that the Authority erred in its decision at page 5 in concluding that it did not have to differentiate between different kinds of listed events. This was said to be erroneous since the right in question is the right to televise `the event'. The nature of the event is not irrelevant whatever it may be, whether a cricket match, another sporting match or some other quite different activity. It was submitted that the Authority itself, when assessing highlights rights, looks at the nature of the event and the same factor is relevant whether it be highlight events or the assessment of other rights. This proposition was based on the `Guide to TV Anti-Siphoning Provisions', a document issued in October 1996 by the Authority (p 15).
Counsel for Nine argued that the Authority reached its conclusion on the basis of full coverage rights and did not decide the question by reference to the broadcast of highlights. If it had done so it should have concluded that those rights alone or in combination with the other rights would not `be the right to televise the event'.
Counsel submitted that the decision of the Authority should be set aside and the matter remitted to the Authority to decide again according to law within a period of say 72 hours, bearing in mind that the first Test match commences in Johannesburg on Friday, 28 February.
Counsel for Foxtel Cable said that the only question for resolution was the interpretation of the phrase in condition 10(1)(e) `the right to televise', a phrase that has not been the subject of judicial determination. The `right to televise' was said to refer simply to an entitlement to televise; and it says nothing about when the right is to be exercised. On the facts of this case `the right to televise' was the right to televise each of the Test matches and One-Day matches. This right was conferred upon Seven on 20 December 1996 and it is irrelevant that the exercise of the right was postponed until three months after the conclusion of each match (later seven days following the variation made and confirmed on 20 January 1997). At the time Foxtel Cable acquired its rights on 6 January 1997, after the acquisition by Seven of its rights on 24 December 1996 (though with the delay factor of three months at that point), it too acquired the right to televise the matches. It is irrelevant that the rights acquired by Foxtel Cable were to the live televising of the matches because the rights granted to Seven and the rights granted to Foxtel Cable both answer the description of the right to televise within the meaning of condition 10(1)(e).
Counsel for Foxtel Cable also argued that, if the Court were otherwise against Foxtel Cable, the subject of the complaint of Seven should not be remitted to the Authority for further consideration because, if there had been a breach by Foxtel Cable, that breach had already occurred and in the meantime the intervening rights of Seven had arisen, rights integrally associated with those of Foxtel Cable.
Findings
Section 115 is the principal `anti-siphoning' provision of the Act. Programme siphoning in the context of the Act means the obtaining by a subscription television broadcasting licensee of the rights to broadcast events of national importance and cultural significance, such that those events could not be received by the public free of charge. Section 115 curtails siphoning by providing for a special list of events or kinds of events to be notified by the Minister under the section. It is a condition of a subscription television broadcasting licence that a licensee shall not acquire the right to broadcast an event listed in a notice published by the Minister under s. 115(1) unless a national broadcaster or a commercial television licensee has acquired that right (condition 10(1)(e)).
Whilst an event remains on the list (this is generally seven days: s. 115(1B)) the Australian public viewing free-to-air channel television is assured of seeing programmes which may also be available to subscribers to pay television.
In my view it would be contrary to the anti-siphoning provisions of the Act if a notified event such as a popular international cricket match cannot be seen by viewers on free-to-air channels earlier than seven days after the game has finished, yet is available live on pay TV channels in the meantime.
The unlikelihood of people watching the replay of a cricket match more than a week after it has finished is obvious; and this was obvious to Seven itself because it does not intend to exercise its right to broadcast the match seven days after the event. It proposes to confine itself to broadcasting highlights on a daily basis during the currency of a match.
In order to ensure that the licence condition (condition 10(1)(e)) is met, the right acquired by the free-to-air broadcaster to televise the relevant event must be capable of being exercised before the event is removed from the notice pursuant to s. 115(1B), that is before the expiration of seven days after the event has concluded. That is why the 7 day (or 168 hour) period is fixed by s. 115(1B).
On the facts of this case Seven has no right to televise the cricket matches until the event has been removed pursuant to s. 115(1B). But Foxtel Cable has the right to televise the relevant matches during the period when Seven has no right to televise them on free-to-air television.
Further, the rights acquired by the subscription licensee must, in order to satisfy condition 10(1)(e), be rights not greater than the rights of the free-to-air broadcaster to televise the event. Yet Foxtel has the right to televise live all the relevant matches at times when the only right then capable of being exercised by Seven is the right to televise highlights.
The right to televise highlights of a cricket match is not substantially the same as the right to broadcast the match itself, so it could not be said that the rights acquired by Seven to televise the highlights of the various matches are sufficient to prevent breach of condition 10(1)(e) by Foxtel Cable.
The Authority took a fundamentally different view when making the decision under challenge; and in doing so in my opinion it erred in law.
The Authority's decision must be set aside and the matter remitted to it to decide the matter again according to law. Foxtel must pay the costs of Nine of the proceeding. It is not disputed that there should be no order for the Authority's costs.
I shall not make orders today but stand the matter over so that the parties may agree upon the appropriate orders. The Court directs Nine to bring in short minutes of order at a time and date to be agreed.
I hereby certify that this and
the preceding twenty-three (23)
pages herein are a true copy of
the reasons for judgment of the
Honourable Justice Lockhart.
Associate
Dated: 25 February 1997
Counsel for the Applicant: A. Robertson SC
J. Griffiths
Solicitors for the Applicant: Blake Dawson Waldron
Counsel for First Respondent: J.S. Hilton SC
Solicitors for First Respondent: Australian Government
Solicitor
Counsel for Second Respondent: G. Flick SC
N. Perram
Solicitors for Second Respondent: Allen Allen & Hemsley
Date of Hearing: 21 February 1997
Date of Judgment: 25 February 1997
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