Foxtel Cable Television Pty Ltd v Nine Network Australia Pty Ltd
[1997] FCA 185
•26 MARCH 1997
C A T C H W O R D S
BROADCASTING - Anti-siphoning provisions - Declared events - Cricket matches in South Africa - Agreement with commercial television broadcasting licensee for right to televise each match but transmission delayed until 168 hours after completion of the match - Agreement permitted one hour's highlights each day - Whether the licensee had "the right to televise the event".
Broadcasting Services Act 1992, s 155, Schedule 2, Part 6, Condition 10(1)(e).
No. NG.144 of 1997
FOXTEL CABLE TELEVISION PTY LIMITED (ACN 069 008 797)
v NINE NETWORK AUSTRALIA PTY LTD (ACN 005 685 407) and
AUSTRALIAN BROADCASTING AUTHORITY
CORAM: WILCOX, LEE and R D NICHOLSON JJ
PLACE: SYDNEY (HEARD IN PERTH)
DATE: 26 MARCH 1997
IN THE FEDERAL COURT OF AUSTRALIA )
) No. NG.144 of 1997
NEW SOUTH WALES DISTRICT REGISTRY )
)
GENERAL DIVISION )
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:FOXTEL CABLE TELEVISION PTY LIMITED (ACN 069 008 797)
Appellant
AND:NINE NETWORK AUSTRALIA PTY LTD (ACN 005 685 407)
First Respondent
and
AUSTRALIAN BROADCASTING AUTHORITY
Second Respondent
CORAM: WILCOX, LEE and R D NICHOLSON JJ
PLACE: SYDNEY (HEARD IN PERTH)
DATE: 26 MARCH 1997
MINUTES OF ORDER
THE COURT ORDERS THAT:
The appeal be dismissed
The appellant, Foxtel Cable Television Pty Limited, pay to the first respondent, Nine Network Australian Pty Limited, its costs of the appeal.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
) No. NG.144 of 1997
NEW SOUTH WALES DISTRICT REGISTRY )
)
GENERAL DIVISION )
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:FOXTEL CABLE TELEVISION PTY LIMITED (ACN 069 008 797)
Appellant
AND:NINE NETWORK AUSTRALIA PTY LTD (ACN 005 685 407)
First Respondent
and
AUSTRALIAN BROADCASTING AUTHORITY
Second Respondent
CORAM: WILCOX, LEE and R D NICHOLSON JJ
PLACE: SYDNEY (HEARD IN PERTH)
DATE: 26 MARCH 1997
REASONS FOR JUDGMENT
THE COURT: When Parliament decided to make provision, in the Broadcasting Services Act 1992, for subscription television, one of the issues it needed to confront was what to do about major events; events, particularly sporting events, that the Australian public had long been accustomed to having available on free-to-air television. If nothing was done, and market forces were allowed to prevail, there was a chance that a subscription service would acquire the exclusive right to televise such an event; and thereby deny everyone but its
subscribers the opportunity to view it on television. Parliament thought this possibility unacceptable. Accordingly, it included in the Act some provisions that are generally called "the anti-siphoning provisions". These provisions do not force the free-to-air transmission of a declared event. Provisions having that effect would have cut across the underlying philosophy of the Act; namely, that it is generally for the national broadcasters (the Australian Broadcasting Corporation and Special Broadcasting Service) and commercial television broadcasting licensees to determine what programs to televise on the services provided by them. The anti-siphoning provisions operate indirectly. They encourage the free-to-air transmission of declared events by removing any incentive for a subscription service to "lock away" the exclusive rights; if it does so, it loses its own right to televise the event.
The anti-siphoning provisions consist of two elements: s 115, in Part 7 of the Act, which deals with subscription television services; and a standard condition imposed on subscription television licensees under Part 6 of Schedule 2 of the Act.
Section 115, as amended in 1995, reads:
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.
The Minister may, by notice published in the Gazette, amend a notice under subsection (1) to remove an event from the notice.
...
(3)Notices and declarations under this section are disallowable instruments for the purposes of section 46A of the Acts Interpretation Act 1901."
Part 6 of Schedule 2 includes condition 10(1)(e) which reads:
Each subscription television broadcasting licence is subject to the following conditions:
...
(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;"
The expression "the right to televise" an event clearly refers to a right to broadcast by television transmission.
The facts
On 6 July 1994, the then Minister for Communications and the Arts, Mr Michael Lee MP, published in the Commonwealth of Australia Gazette a notice specifying for the purposes of s 115 various events, to be held up to 31 December 2004. They included certain cricket matches: each Test match and one-day match involving the senior Australian representative team selected by the Australian Cricket Board, and each World Cup one-day match. The declared events included, therefore, the three Test matches and seven one-day games against the Republic of South Africa that the Australian representative team is committed to play in its current tour of that country.
News Limited ("News") apparently acquired the Australian free-to-air and pay-TV broadcast rights for the South African tour. On 28 October 1996, one of its executives, Tom Mockridge, wrote to David Leckie of Nine Network Australia ("Nine") offering Nine the free-to-air rights for the Test matches and one-day games. Mr Mockridge told Mr Leckie that News intended to offer the pay rights to Fox Sports and/or Foxtel, two subscription television services. On 6 November, Mr Leckie responded with a letter in
which he made an offer for the free-to-air rights. He nominated a substantial fee. But News did not accept the offer. There were discussions between Mr Leckie and Mr Mockridge. On 5 December Mr Leckie wrote again, renewing Nine's offer. This was rejected on 15 December.
Although News had not yet made any contractual agreement with Fox Sports or Foxtel, Nine apparently became aware that one or both these subscription services was likely to televise the South African matches. On 20 December 1996 Mr Leckie wrote to the Australian Broadcasting Authority ("the ABA") questioning whether there had been a breach of condition 10(1)(e)(ii). Four days later, on 24 December, News made an agreement with Seven Network Limited ("Seven") whereby it granted to that network the exclusive free-to-air television rights to the three Test matches and seven one-day matches, together with exclusive free-to-air television rights to telecast a one-hour highlights program each day. The fee for all this was only a small fraction of the fee that had previously been offered by Nine. The reason for the difference, no doubt, was that it was a condition of the agreement that Seven must not commence its telecast of any match (as distinct from a highlights program) earlier than three months after the end of the relevant match. The agreement specifically stated that Seven was not obliged to telecast the matches.
On 6 January 1997, News made an agreement with Foxtel Management Pty Limited ("Foxtel Management") granting it the "exclusive Australian pay television rights" to the three South African Test matches. The granted rights involved "full coverage of each Test on a live telecast basis and exclusive pay television replay rights". Under the heading "Coverage", the agreement stated Foxtel "will have exclusive live television rights (against free-to-air and pay television) in the Territory [that is, Australia] for each Test". On the same day, News made a similar agreement with Fox Sports Pty Limited covering the seven one-day matches. It seems that Foxtel Management assigned its rights under the first of these two agreements to a related company, Foxtel Cable Television Pty Limited, ("Foxtel Cable").
The ABA took up Nine's complaint with News and Seven. As a result of discussions with them, the arrangement between News and Seven was amended so as to reduce the required delay in televising a match from three months to 168 hours (one week). The amendment had no practical importance. Seven made it clear that it had no intention of televising the matches anyway. Seven's representative explained to an ABA officer that "a full delayed telecast would be 'like watching paint dry' for the audience since the results of the matches would already be known".
Although it must have been obvious that the steps taken by News were intended to circumvent the anti-siphoning
provisions of the Act, the ABA found they involved no legal problem. In a report to the present Minister for Communications and the Arts, Senator Richard Alston, dated 29 January 1997, the ABA argued that:
"The provision in Seven's contract of a condition preventing it from exercising its rights to delayed coverage of the events goes to the issue of broadcast, not to the acquisition of rights. In the ABA's view, it is not relevant to the issue of compliance with the condition in Schedule 2."
The proceeding below
The ABA informed Nine of its conclusion. Nine was not satisfied. On 13 February 1997 it commenced this proceeding, seeking review under the Administrative Decisions (Judicial Review) Act 1977 of the ABA's decision. It contended the decision involved an error of law, and sought orders that the decision be set aside and the matter remitted to the ABA for further consideration. Nine named the ABA as first respondent and Foxtel Cable as second respondent. As the first Test match was due to start on 28 February, the parties sought an urgent hearing of the application.
The application was heard by Lockhart J on 21 February 1997. Foxtel Cable argued in support of the ABA's decision. Four days later, his Honour handed down reasons for judgment upholding Nine's challenge to that decision. After referring to the facts and the significance of the anti-siphoning provisions, his Honour said:
"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. "
On 26 February Lockhart J ordered that the ABA's decision be set aside, that Nine's complaint be remitted to the ABA for further consideration according to law and that Foxtel Cable pay Nine's costs.
At about the time of the hearing before Lockhart J, it was announced that Seven would televise, live, part of each day's play in each of the Test matches. Apparently, Seven and News had agreed to modify their principal agreement. We are not aware of the reason for, or terms of, this agreement.
The appeal
Foxtel Cable appealed against Lockhart J's decision. An urgent hearing was arranged, for 17 March. On that day counsel for Foxtel Cable appeared to support the ABA's decision and to argue that Lockhart J was wrong in holding it erroneous in law. Counsel put numerous submissions concerning the operation of s 115 and condition 10(1)(e), many of which are not raised by the facts of this case. Some of those issues may be important to the outcome of other cases. For that reason, particularly, we think it undesirable to comment on them. We confine ourselves to the only issues that properly arise in this case, being the issues considered by Lockhart J: can it be said that a commercial television service has "the right to televise the event" if:
(a)it has only a right to televise it after a delay of three months, or even 168 hours?; or
(b)it has only a right to televise a one-hour highlights program for each day of the event?
Agreeing with Lockhart J, we think these questions must be answered in the negative.
We accept that condition 10(1)(e)(ii) is concerned with a commercial television licensee's right to televise a declared event, rather than whether or not it actually does so. But it seems to us that the ABA fell into a fundamental error in characterising the delay provision in Seven's contract with News as one going "to the issue of broadcast, not to the acquisition of rights". The effect of the condition was to deny Seven the right to televise the matches within three months (later one week). Because of the condition, Seven never acquired the right to televise any of the matches during the period they were on the list of declared events. It was denied the right to televise, regardless of its wishes, just as effectively as if nothing had been said in its agreement with News about the televising of matches, as distinct from highlights.
Counsel for Foxtel Cable argued that the agreement gave Seven "the right to televise" each match, notwithstanding that the right was only available for use after the expiration of 168 hours from completion of the match. However, like Lockhart J, we do not think that such a right can properly be described as a "right to televise the event". It must be remembered that the anti-siphoning provisions are concerned with events of a national nature, events that the Minister has adjudged likely to attract widespread public interest. They will not necessarily be sporting events; the provisions could be used to cover an historical event like a special commemoration or visit. But all the events listed in the notice of 6 July 1994 were sporting events and this may be the future pattern. Either way, events are selected because the Minister is of the opinion that many people will wish to feel part of them, by seeing them as they occur; not by later seeing a television record of them. In the present context, we do not think it can be said that a national broadcaster or television broadcasting licensee has the "right to televise the event" unless that broadcaster or licensee can televise it as it happens, or as soon thereafter as is technically feasible.
In their written outline of submissions, counsel for Foxtel Cable referred to the explanatory memorandum to the 1995 amendments, which substituted the present form of condition 10(1)(e). The memorandum said:
"The policy objective of these provisions is to prevent Pay-TV licensees acquiring the exclusive rights to broadcast important events that should be available free to the public on free-to-air television services."
It seems to us this statement supports the approach we take, rather than the contrary. It would make nonsense of a provision designed to ensure public access to "important events that should be available free to the public on free-to-air television services" to hold that it was sufficient there be a right to televise after seven days.
Similarly, it cannot be said that a right limited to the broadcast of one-hour of highlights of each day of an event is a right to televise the event. A summary of a work is not the work itself. This approach is consistent with the terms of s 115(2). If a national broadcaster or commercial television broadcasting licensee has only acquired the right to broadcast highlights of an event, having had a real opportunity to acquire the right to televise the event itself, the Minister may remove that event from the notice.
Finally, counsel say that the purpose of the anti-siphoning provisions is to provide commercial television licensees with a "headstart", a period during which they can negotiate with the holder of the right to televise an event. This is all that will be needed, the argument runs; the opportunity for negotiation will ensure that market forces prevail.
We make two comments about that argument. First, the relevant provisions are not about "headstart" at all. They do not impose any limitations on negotiations or agreements. They impose a restriction on a subscription service televising an event. Second, it seems to us naive to assume that decisions in relation to the televising of a particular event will necessarily be made only by reference to market forces. The Australian television industry is dominated by companies having a variety of media interests. A company's attitude to the televising of a particular event may well be influenced by other interests of that, or a related, company. This may be the reason why News refused Nine's offer in the present case but made an agreement with Seven that returned it a much smaller fee. But for the variation that occurred at the time of the hearing before Lockhart J, the Seven agreement would have given the Foxtel companies, which we understand to be part-owned by News, total freedom from competition in respect of the televising of the matches. That result would have defeated the purpose of the anti-siphoning provisions.
The appeal should be dismissed with costs.
I certify that this and the preceding twelve (12) pages
are a true copy of the Reasons for Judgment
of the Court.
Associate:
Dated: 24 March 1997
APPEARANCES
Counsel for the Applicant: N Hutley QC and N Perram
Solicitors for the Applicant: Allen Allen & Hemsley
Solicitor for the First Respondent: P Mallam
Solicitors for the
First Respondent: Blake Dawson Waldron
Counsel for the Second Respondent: K J Martin QC
Solicitors for the
Second Respondent: Australian Government Solicitor
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