C7 Sport: Wikis

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C7 Sport
C7 logo.png
C7 Sport Logo
Launched 1995
Closed 2002
Owned by Seven Media Group
Picture format 576i (SDTV)
Slogan See More Action, C7 Sport
Replaced Sports Australia
Sister channel(s) C7 Twelve
C7 Thirteen
Website au.sports.yahoo.com
Availability at time of closure
Satellite
Austar Channel 12, 13
Cable
Optus Vision Channel 12, 13

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.

Contents

Early days

When Optus Vision launched in 1995, it carried two sports channels: Sports Australia, and Sports AFL (which showed Australian Football League games.) These channels were run by a company called Sports Vision, in which Seven 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, National Rugby League, 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.

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 in March 1998 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 Gold become available to most of regional Australia. 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 war 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 C7 Litigation

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The Claim

Late in 2000, Seven lost the rights to the AFL to a News Corporation headed consortium also containing Publishing and Broadcasting Limited, 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. Austar and Optus ceased carrying the service after the 2002 Salt Lake City Winter Olympics, replacing it with Fox Footy.

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 AUD$480 million, amended from the original claim of AUD$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.

The Trial Decision

The judgment was handed down on 2007-07-27. In an unusual move, the judgment was filmed by the ABC 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.

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 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.

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