ASIC alleges Harold Mitchell told Seven details of Ten’s interest in 2013 tennis rights

Harold Mitchell, once one of the most powerful media executives in Australia, has been accused of sharing details of Network Ten’s interest in the 2013 Tennis Australia broadcasting rights to rival television network and bidder, Seven.

According to documents filed with the Federal Circuit Court of Australia, The Australian Securities and Investments Commission (ASIC) is alleging Mitchell advised the board along with Steve Wood, then CEO of Tennis Australia, that the broadcasting rights should remain with the Seven Network, despite their bid being significantly lower than Network Ten’s.

ASIC’s case against Mitchell and then director of Tennis Australia Steve Healy relates to the decision made in 2013, which saw Seven Network retain the broadcasting rights to the tennis for a further five years.

Seven Network had already held the broadcasting rights for the Australian Open for over 40 years.

The court documents allege that Seven Network offered to acquire the domestic broadcast rights for five years for a total fee of $125 million, even though the rights were valued by sports and media consultancy firm Gemba to be worth approximately $148m to $212m, or about $40m per year.

According to ASIC’s statement, Network Ten was also interested in securing the tennis broadcasting rights and “suggested it might offer more than $40 million per annum (perhaps even up to $50 million per annum) for those rights.”

Sports agency IMG, which at the time held Tennis Australia’s international broadcasting rights, also offered to acquire “both the domestic and the international broadcast rights for seven years for a total fee of $210 million”.

“Mitchell was also aware of Network Ten’s interest and knew that Seven Network was concerned that it might be outbid by Network Ten,” the documents allege.

ASIC’s statement alleges that “Mitchell emailed Lewis Martin [managing director of Seven Network Melbourne] and Bruce McWilliam [Seven’s commercial director] regarding the Seven Network offer”.

The email allegedly stated: “Let’s wrap this up next week. Leave it with me,” McWilliam replied. “Thanks Harold – agree and thanks.”

The documents allege Seven provided two further amended offers in October 2012. “[Tennis Australia’s] Wood refused to agree a deal, including because he considered the rights fee offered by Seven Network too low,” it said.

ASIC’s statement claims Mitchell passed on details of Network’s Ten interest in the broadcasting rights to Seven, to which McWilliam reportedly said internally: “Sadly our friends at Ten have been speaking $40 mill a year in rights fees and whilst Mitchell has pooh poohed that, management of [Tennis Australia] is aware.”

While Tennis Australia’s board was told of Seven Network’s offer, the court documents claim Mitchell “had persuaded Wood not to provide the board with a copy of the IMG offer”.

“The board was told of the IMG offer but given no details,” claim the documents. “Mitchell told the meeting that the Seven Network offer was reasonable and that the IMG offer should not be considered because IMG was an agent not a broadcaster, it could not be trusted, and its offer was ‘too conditional’.

“The interest of Network Ten and Nine Entertainment was mentioned but not discussed in any detail,” the filing continues.

Allegedly in early 2013, Seven Network’s chairman Kerry Stokes expressed his concern in an internal email to senior executives which read: “Make no mistake, they [Network Ten] are after the tennis – they will pay a big cheque to start with a marque… We need to make sure we are there at this board meeting – let’s not take any chances. I reckon the delay has been so Ten and Foxtel can ready with a bid.”

McWilliam allegedly responded: “I will call Harold again about this. I am also worried. Harold swears we r safe but I will get onto him again.”

Shortly after this IMG allegedly made a second bid for the domestic and international rights to Tennis Australia on the request of Tennis Australia’s CEO, Wood.

According to the documents: “IMG responded by offering to acquire the domestic rights for five years at a fee of $30 million per annum. Both Mitchell and Healy were aware of IMG’s second offer.”

Following this, Tennis Australia allegedly held a board meeting where the board and its members were “not provided with the Gemba’s valuation” or “a copy of IMG’s recent separate offer for the domestic broadcast rights”.

The documents claim Mitchell recommended the board “establish a subcommittee to be chaired by Mitchell to oversee the negotiation of the broadcast rights and report back to the board”.

Healy, who was responsible for setting Tennis Australia’s board meeting agendas, was also on the committee, according to the documents.

After the subcommittee was formed, Seven Network allegedly “made a further offer to acquire the domestic broadcast rights for $195 million, with a cash component of $173 million”.

When the Tennis Australia board met on May 20 2013 to consider the offer, according to ASIC’s filing, Mitchell and Tennis Australia’s CEO Wood “recommended that the offer be accepted”.

Meanwhile, Nine was in the process of securing the international cricket rights while Ten was about to bag the Big Bash broadcasting rights.

The court documents allege: “Mitchell told the board that Nine Entertainment would not be interested in acquiring the broadcast rights as it was committed to acquiring the cricket rights.

“Mitchell also told the board that Network Ten was not in a sound financial position and could not afford to pay for the rights.

“Mitchell said that the sub-committee recommended that the Seven Network offer be accepted. The [Tennis Australia] board resolved to accept the offer and on 29 May 2013, [Tennis Australia] and Seven Network signed contracts.”


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