C7 Sport
Encyclopedia
C7 Sport was a pay-TV service in Australia, owned and run by Kerry Stokes
' Seven Network
. The service was carried on the Austar
and Optus Vision pay-TV networks between 1995 and 2002, when it was removed in controversial circumstances. Seven is pursuing legal action over the matter.
games.) These channels were run by a company called Sports Vision, in which Seven Network
was a partner. A third channel, Sports Australia 2, was added during the 1996 Atlanta Olympics, and later used to show additional live programming.
The programming lineup on the Sports Australia service was generally considered superior to that of its rival, Fox Sports Australia, with the AFL, Australian Rugby League
premiership, the Australian National Soccer League
, the FA Premier League
, and Sheffield Shield cricket. At the time, Fox Sports' lineup focused more on less popular sports.
Shortly afterwards, Seven signed a deal with Austar that saw C7 become available to most of regional Australia from April. Austar had many more subscribers than Optus at the time. Before the deal, C7 had only been available in the small Optus cabled areas in Sydney, Melbourne and Brisbane. C7 was never available to the majority of people in the capital cities (except Hobart and Darwin).
in 1997, C7 no longer had exclusive rights to NRL games, having to share them with Fox, and had totally lost the rights to the FA Premier League.
C7 began negotiations with Foxtel in order to make the channels available to a wider audience, but Foxtel refused to carry them. Foxtel claimed that C7 was an inferior service, for which Seven wanted an exorbitant price. C7 won two Federal Court actions backing their position, but Foxtel claims it acted in accordance with the Court's rulings. Seven won the right to put its programming on Foxtel's analog cable system, including its set-top-boxes.
C7 still had the AFL, and crucially, had the rights to the 2000 Sydney Olympics. An additional two channels ("C7 Olympic" and "C7 Games") were set up, which would carry non-stop Olympic programming during the Games; the channels were made available to Austar and Optus customers at an additional cost. After lengthy negotiations, Foxtel and C7 reached a deal just weeks before the Games, and the channels became available to Foxtel viewers.
C7 was later forced to give refunds to some customers after the Australian Competition and Consumer Commission ruled that they had misrepresented the C7 Olympic service in advertising; promotional materials claimed that the service would carry all Australian men's and women's basketball games.
headed consortium also containing PBL
, Network Ten
and Telstra
. The new rights deal, which started with the 2002 season, saw Nine and Ten carry games on free-to-air, and a new service, Fox Footy Channel
, launched on Foxtel.
C7 continued to provide its service to Optus and Austar, but its programming lineup near the end of its run was extremely weak. C7 was reduced to showing XFL
games (on several weeks' delay) and live woodchopping in prime time. Optus dropped the channel in late March, replacing it with Fox Sports
. Soon after Austar replaced it with the Fox Footy Channel
. With no carrier, the channel was officially closed on 7 May.
Later that year, Seven launched what is considered to be the largest ever media lawsuit in Australia, naming 22 defendants including Nine, Ten, Optus, Austar, the AFL, the NRL, Fox Sports, PBL and Telstra. Primarily basing the claim on anti-competitive provisions in Part IV of the Trade Practices Act, among Seven's claims are that:
Seven claimed damages of A$480 million, amended from the original claim of A$1.1 billion. Soon after the case began the suits against Network Ten and the AFL were settled, with C7 allegedly withdrawing the allegations against those parties. The case was heard in the Federal Court
by Justice Ronald Sackville
.
and broadcast live on television and the internet. Sky News
(owned in part by the Seven Media Group and PBL), Yahoo7, The Sydney Morning Herald website and ABC Online all broadcast the judgment live.
C7 lost the case conclusively on most points with Justice Sackville declaring that, based upon the anti-competitive provisions of the Trade Practices Act upon which Seven relied, the case could not succeed. In a key point, he explained that "the reason is that even if each of the consortium respondents had the objective attributed to it by Seven - that of killing C7 - achieving that objective could not have substantially lessened competition in the retail television market."
Justice Sackville labelled Seven as "far from a helpless and innocent victim", even suggesting they were hypocritical in regards to the issue of price-ramping of broadcast rights. Orders for costs were reserved, with His Honour asking for submissions but warning parties to limit them to no more than 10 pages long.
Although His Honour found that Seven had failed to establish the existence of a wholesale
Pay TV market, he found that they did establish that a retail Pay TV market existed in Australia. "It follows from these findings that Seven can only succeed in its anti-competitive conduct case ... if the provisions on which it relies had the effect or likely effect of substantially lessening competition in the retail pay television market", His Honour said.
In costs documents lodged on 2007-08-27 the NRL, one of the defendants in the case, argued for an indemnity costs order, the actual costs incurred by the parties, be awarded against Seven, with the figure estimated at approximately $200 million. It is claimed that the primary reason for this is that Seven refused a formal settlement offer only weeks before the judgment was handed down.
On 2007-09-14 Seven agreed to a costs settlement with News Limited, the Australian Football League, the National Rugby League, Channel Ten and pay-TV group Austar. The costs payments will also be proportionately settled with parties in the case owned in part by News - its 25 per cent owned pay-TV company Foxtel and 50 per cent owned pay-TV sports channel Fox Sports. Seven will pay News Limited the sum of $23.5 million in the settlement, approximately 50% of the costs incurred by News. Seven failed to reach any such agreement with Foxtel and Fox Sports co-owner Publishing & Broadcasting Ltd, Optus and Telstra.
During the formal costs hearing on 2007-09-17, the Federal Court heard argument from PBL, Telstra and Optus that they should receive indemnity costs backdated from August 2005, due to Seven's rejection of a formal settlement offer comprising a $10 million payment and the entire amount of Seven's costs, which at that point were approximately $40 million. In costs documents lodged with the court, it was revealed that PBL had spent $21.5 million but is seeking between $17.7 and $18 million; Telstra spent $20.7 million and is seeking $17 million; while Optus spent $9.2 million and is seeking $7.1-7.3 million.
Justice Sackville noted that he was in "quite a difficult position" in determining any costs order, as it was difficult to assess whether Seven acted unreasonably in not accepting the effectively $50 million offer. Adding to the difficulty, but not entirely binding, was Justice Sackville's comment that the Court was considering - but did not yet have in place - a rule where a losing party should have to pay indemnity costs if it could be shown that it had rejected an earlier offer of settlement. PBL's lead counsel, Tony Meagher SC, claimed in the hearing that Seven should have realised the "enormous problems" in its case as at August 2005. Justice Sackville reserved his decision.
Kerry Stokes
Kerry Matthew Stokes AC is an Australian businessman. He holds business interests in a diverse range of industries including electronic and print media, property, mining, and construction equipment. He is most widely known as the chairman of the Seven Network, one of the largest broadcasting...
' Seven Network
Seven Network
The Seven Network is an Australian television network owned by Seven West Media Limited. It dates back to 4 November 1956, when the first stations on the VHF7 frequency were established in Melbourne and Sydney.It is currently the second largest network in the country in terms of population reach...
. The service was carried on the Austar
Austar
Austar is an Australian telecommunications company. Its main business activity is Subscription Television but it is also involved with internet access and mobile phones...
and Optus Vision pay-TV networks between 1995 and 2002, when it was removed in controversial circumstances. Seven is pursuing legal action over the matter.
Early days
When Optus Vision launched in 1995, it carried two sports channels: Sports Australia, and Sports AFL (which showed Australian Football LeagueAustralian Football League
The Australian Football League is both the governing body and the major professional competition in the sport of Australian rules football...
games.) These channels were run by a company called Sports Vision, in which Seven Network
Seven Network
The Seven Network is an Australian television network owned by Seven West Media Limited. It dates back to 4 November 1956, when the first stations on the VHF7 frequency were established in Melbourne and Sydney.It is currently the second largest network in the country in terms of population reach...
was a partner. A third channel, Sports Australia 2, was added during the 1996 Atlanta Olympics, and later used to show additional live programming.
The programming lineup on the Sports Australia service was generally considered superior to that of its rival, Fox Sports Australia, with the AFL, Australian Rugby League
Australian Rugby League
The Australian Rugby League is the governing body for the sport of rugby league in Australia. It is made up of state bodies, including the New South Wales Rugby League and the Queensland Rugby League...
premiership, the Australian National Soccer League
National Soccer League
The National Soccer League is the former national association football competition in Australasia, overseen by Soccer Australia and later the Australian Soccer Association. The NSL spanned 28 seasons from its inception in 1977, until its demise in 2004...
, the FA Premier League
FA Premier League
The Premier League is an English professional league for association football clubs. At the top of the English football league system, it is the country's primary football competition. Contested by 20 clubs, it operates on a system of promotion and relegation with The Football League. The Premier...
, and Sheffield Shield cricket. At the time, Fox Sports' lineup focused more on less popular sports.
Seven's involvement
In 1997 Sports Vision ran into financial difficulty; Sports Australia struggled to get viewers due to the limited reach of the Optus cable, and aggressive marketing of the Fox Sports service by Foxtel. The company eventually collapsed, but the Seven Network bought the channels and relaunched them on 1 March 1999 under the C7 Sport brand. Sports Australia became "C7 Gold", or "C7 Twelve", after its channel assignment on Optus. Sports Australia 2 became "C7 Blue", or "C7 Thirteen". Sports AFL's programming was carried on the other two channels.Shortly afterwards, Seven signed a deal with Austar that saw C7 become available to most of regional Australia from April. Austar had many more subscribers than Optus at the time. Before the deal, C7 had only been available in the small Optus cabled areas in Sydney, Melbourne and Brisbane. C7 was never available to the majority of people in the capital cities (except Hobart and Darwin).
The Olympics
C7 continued to lose programming to Fox Sports; after the Super League warSuper League war
The Super League war is the common name given to the corporate dispute that was fought in and out of court during the mid-1990s between the Rupert Murdoch and News Corporation-backed Super League and the Kerry Packer and Optus Vision-backed Australian Rugby League organisations over broadcasting...
in 1997, C7 no longer had exclusive rights to NRL games, having to share them with Fox, and had totally lost the rights to the FA Premier League.
C7 began negotiations with Foxtel in order to make the channels available to a wider audience, but Foxtel refused to carry them. Foxtel claimed that C7 was an inferior service, for which Seven wanted an exorbitant price. C7 won two Federal Court actions backing their position, but Foxtel claims it acted in accordance with the Court's rulings. Seven won the right to put its programming on Foxtel's analog cable system, including its set-top-boxes.
C7 still had the AFL, and crucially, had the rights to the 2000 Sydney Olympics. An additional two channels ("C7 Olympic" and "C7 Games") were set up, which would carry non-stop Olympic programming during the Games; the channels were made available to Austar and Optus customers at an additional cost. After lengthy negotiations, Foxtel and C7 reached a deal just weeks before the Games, and the channels became available to Foxtel viewers.
C7 was later forced to give refunds to some customers after the Australian Competition and Consumer Commission ruled that they had misrepresented the C7 Olympic service in advertising; promotional materials claimed that the service would carry all Australian men's and women's basketball games.
The Claim
Late in 2000, Seven lost the rights to the AFL to a News CorporationNews Corporation
News Corporation or News Corp. is an American multinational media conglomerate. It is the world's second-largest media conglomerate as of 2011 in terms of revenue, and the world's third largest in entertainment as of 2009, although the BBC remains the world's largest broadcaster...
headed consortium also containing PBL
Publishing and Broadcasting Limited
Publishing and Broadcasting Limited was one of Australia's largest companies, with interests primarily in media and gaming. The company demerged in late 2007, spinning out its gaming interests into Crown Limited...
, Network Ten
Network Ten
Network Ten , is one of Australia's three major commercial television networks. Owned-and-operated stations can be found in Sydney, Melbourne, Brisbane, Adelaide and Perth, while affiliates extend the network to cover most of the country...
and Telstra
Telstra
Telstra Corporation Limited is an Australian telecommunications and media company, building and operating telecommunications networks and marketing voice, mobile, internet access and pay television products and services....
. The new rights deal, which started with the 2002 season, saw Nine and Ten carry games on free-to-air, and a new service, Fox Footy Channel
Fox Footy Channel
The Fox Footy Channel was a channel exclusively dedicated to Australian rules football. It was owned by Foxtel, and operated out of their Melbourne based studios. It was available on Foxtel, Austar, Optus Television, TransTV and Neighbourhood Cable up until transmission was ceased on 1 October 2006...
, launched on Foxtel.
C7 continued to provide its service to Optus and Austar, but its programming lineup near the end of its run was extremely weak. C7 was reduced to showing XFL
XFL
The XFL was a professional American football league that played for one season in 2001. The league was founded by Vince McMahon, the Chairman of the Board of Directors of WWE...
games (on several weeks' delay) and live woodchopping in prime time. Optus dropped the channel in late March, replacing it with Fox Sports
Fox Sports (Australia)
Fox Sports is an Australia group of sports channels. They are owned by the Premier Media Group, which is in turn owned by News Corporation, and Consolidated Media Holdings. Its main competitors are ESPN, which has little local content and the free-to-air digital channel One HD...
. Soon after Austar replaced it with the Fox Footy Channel
Fox Footy Channel
The Fox Footy Channel was a channel exclusively dedicated to Australian rules football. It was owned by Foxtel, and operated out of their Melbourne based studios. It was available on Foxtel, Austar, Optus Television, TransTV and Neighbourhood Cable up until transmission was ceased on 1 October 2006...
. With no carrier, the channel was officially closed on 7 May.
Later that year, Seven launched what is considered to be the largest ever media lawsuit in Australia, naming 22 defendants including Nine, Ten, Optus, Austar, the AFL, the NRL, Fox Sports, PBL and Telstra. Primarily basing the claim on anti-competitive provisions in Part IV of the Trade Practices Act, among Seven's claims are that:
- Foxtel deliberately denied C7 access to Telstra's cable network and Foxtel's STBs, in order to weaken C7's position when negotiating television deals with the AFL and NRL (which was against an earlier High Court ruling)
- One or more of the named defendants acted illegally to collude in the marketplace and use their combined market power to prevent competition
- Foxtel's owners (Telstra, News Corporation and PBL) signed an agreement in late 1999 to ensure Foxtel gained the AFL and NRL rights. (This replaced an earlier claim that News and PBL had agreed in 1996 not to compete with each other in the pay-TV market.)
- Optus' deal to carry Fox Sports was a breach of an 'exclusive' contract it had with Seven for the provision of sports programming.
Seven claimed damages of A$480 million, amended from the original claim of A$1.1 billion. Soon after the case began the suits against Network Ten and the AFL were settled, with C7 allegedly withdrawing the allegations against those parties. The case was heard in the Federal Court
Federal Court of Australia
The Federal Court of Australia is an Australian superior court of record which has jurisdiction to deal with most civil disputes governed by federal law , along with some summary criminal matters. Cases are heard at first instance by single Judges...
by Justice Ronald Sackville
Ronald Sackville
Ronald Sackville AO is an acting judge of the Court of Appeal of the Supreme Court of New South Wales and a former judge of the Federal Court of Australia.-Career:...
.
The Trial Decision
The judgment was handed down on 2007-07-27. In an unusual move, the judgment was filmed by the ABCAustralian Broadcasting Corporation
The Australian Broadcasting Corporation, commonly referred to as "the ABC" , is Australia's national public broadcaster...
and broadcast live on television and the internet. Sky News
Sky News Australia
Sky News Australia is an Australian 24 hour cable and satellite news channel available in 2.5 million homes on Foxtel, Austar, Optus Television and Neighbourhood Cable subscription platforms....
(owned in part by the Seven Media Group and PBL), Yahoo7, The Sydney Morning Herald website and ABC Online all broadcast the judgment live.
C7 lost the case conclusively on most points with Justice Sackville declaring that, based upon the anti-competitive provisions of the Trade Practices Act upon which Seven relied, the case could not succeed. In a key point, he explained that "the reason is that even if each of the consortium respondents had the objective attributed to it by Seven - that of killing C7 - achieving that objective could not have substantially lessened competition in the retail television market."
Justice Sackville labelled Seven as "far from a helpless and innocent victim", even suggesting they were hypocritical in regards to the issue of price-ramping of broadcast rights. Orders for costs were reserved, with His Honour asking for submissions but warning parties to limit them to no more than 10 pages long.
Although His Honour found that Seven had failed to establish the existence of a wholesale
Wholesale
Wholesaling, jobbing, or distributing is defined as the sale of goods or merchandise to retailers, to industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services...
Pay TV market, he found that they did establish that a retail Pay TV market existed in Australia. "It follows from these findings that Seven can only succeed in its anti-competitive conduct case ... if the provisions on which it relies had the effect or likely effect of substantially lessening competition in the retail pay television market", His Honour said.
The Costs Hearing
During the trial decision, Justice Sackville commented on the hefty financial cost of the case, remarking that "in my view, the expenditure of $200 million and counting on a single piece of litigation is not only extraordinarily wasteful, but borders on the scandalous". The case has continually been labelled by both the legal and media sectors as one of the most extreme examples of "mega-litigation".In costs documents lodged on 2007-08-27 the NRL, one of the defendants in the case, argued for an indemnity costs order, the actual costs incurred by the parties, be awarded against Seven, with the figure estimated at approximately $200 million. It is claimed that the primary reason for this is that Seven refused a formal settlement offer only weeks before the judgment was handed down.
On 2007-09-14 Seven agreed to a costs settlement with News Limited, the Australian Football League, the National Rugby League, Channel Ten and pay-TV group Austar. The costs payments will also be proportionately settled with parties in the case owned in part by News - its 25 per cent owned pay-TV company Foxtel and 50 per cent owned pay-TV sports channel Fox Sports. Seven will pay News Limited the sum of $23.5 million in the settlement, approximately 50% of the costs incurred by News. Seven failed to reach any such agreement with Foxtel and Fox Sports co-owner Publishing & Broadcasting Ltd, Optus and Telstra.
During the formal costs hearing on 2007-09-17, the Federal Court heard argument from PBL, Telstra and Optus that they should receive indemnity costs backdated from August 2005, due to Seven's rejection of a formal settlement offer comprising a $10 million payment and the entire amount of Seven's costs, which at that point were approximately $40 million. In costs documents lodged with the court, it was revealed that PBL had spent $21.5 million but is seeking between $17.7 and $18 million; Telstra spent $20.7 million and is seeking $17 million; while Optus spent $9.2 million and is seeking $7.1-7.3 million.
Justice Sackville noted that he was in "quite a difficult position" in determining any costs order, as it was difficult to assess whether Seven acted unreasonably in not accepting the effectively $50 million offer. Adding to the difficulty, but not entirely binding, was Justice Sackville's comment that the Court was considering - but did not yet have in place - a rule where a losing party should have to pay indemnity costs if it could be shown that it had rejected an earlier offer of settlement. PBL's lead counsel, Tony Meagher SC, claimed in the hearing that Seven should have realised the "enormous problems" in its case as at August 2005. Justice Sackville reserved his decision.
External links
- Summary of the case in The Australian newspaper (Note: The Australian is published by News Corporation, one of the defendants in the lawsuit)
- C7 judgment to be handed down live to air
- Seven Network Limited v News Limited (2007) FCA 1062 Full Judgment
- Seven and News strike costs deal in C7 case