C7 Pty Ltd v Foxtel Management Pty Ltd

REASONS FOR JUDGMENT 1 This is an application for preliminary discovery pursuant to both O 15A r 6 and O 15A r 3 of the Federal Court Rules. The applicant, C7 Pty Limited ("C7"), is a wholly owned subsidiary of Seven Network Limited ("Seven"). The ninth and tenth respondents, Australian Football League ("AFL") and National Rugby League Limited ("NRL") respectively, are not involved in the present contest. The first four respondents, Foxtel Management Pty Limited ("Foxtel Management"), Sports Investments Australia Pty Limited ("Fox Sports"), News Limited ("News") and Sky Cable Pty Limited ("Sky Cable"), have been jointly represented, as have the fifth, sixth and seventh respondents, Telstra Media Pty Limited ("Telstra Media"), Telstra Multimedia Pty Limited ("Telstra Multimedia") and Telstra Corporation Limited ("Telstra Corporation"). The eighth respondent is Publishing and Broadcasting Limited ("PBL"). 2 C7 seeks documents in four separate paragraphs of its application. Although there are some differences between the respondents referred to in those paragraphs, the substantive difference between them is that of subject matter. The first to eighth respondents resist any order being made, on the basis that no case has been made out for preliminary discovery. They have, however, without prejudice to this contention, offered (albeit on conditions) the production of documents under various headings which, it is said, would satisfy any legitimate call under pars 1 to 3 (inclusive) of the application. Without conceding that this is so, counsel for C7 accepts that the difference between the parties as to the documents called for by these paragraphs would not have warranted further pursuit of the application. The respondents have made no offer of any kind in relation to the production of documents to satisfy par 4. Whilst the documents called for by par 4 are the practical focus of the application, argument in relation to which has taken up a fair part of the oral submissions, I cannot limit attention to that paragraph because each of the first to eighth respondents submit that no case has been made out for any production and certainly not for any production greater than that offered prior to the hearing. 3 The principal basis for the application is O 15A r 6 of the Federal Court Rules, which provides as follows: "6. Where - (a) there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description has been ascertained; (b) after making all reasonable inquiries, the applicant has not sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain that relief; and (c) there is reasonable cause to believe that that person has or is likely to have or has had or is likely to have had possession of any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist in making the decision - the Court may order that that person shall make discovery to the applicant of any document of the kind described in paragraph (c)." 4 The rights to relief which C7 wishes to explore are breaches of the Trade Practices Act 1974 (Cth) ("the TP Act") arising out of, but not limited to, acquisition of the pay television rights in relation to Australian rules football and rugby league football by parties other than C7. In order to explain the issues, it is necessary to say something about the relevant landscape, including aspects of history. Initially, I shall do this with a reasonably broad brush. 5 Three parties offer what might be called retail pay television in Australia: Foxtel Cable Television Pty Limited ("Foxtel Cable"), Optus Television Pty Limited ("Optus TV") and Austar United Limited ("Austar"). Foxtel Cable and Optus TV deliver the service by separate broadband cables, which may, but often do not, service the same customers. The cables are, by and large, limited to major cities. Austar is a listed company with United States affiliation. Austar delivers its service by satellite throughout Australia save for Sydney, Melbourne, Brisbane, Adelaide and Perth. It has a cable in Darwin and utilises the microwave delivery system in Hobart. Foxtel Cable supplies the television service which is managed by Foxtel Management on behalf of two partnerships - "the Foxtel Partnership" and "the Foxtel Television Partnership", the interests in which are held as to 50% by Telstra Media, which is a wholly-owned subsidiary of Telstra Corporation, and as to 50% by Sky Cable, which is owned as to 50% by News and 50% by PBL. Hereafter I will refer to the television service as "Foxtel" without distinguishing between the entities involved. Foxtel utilises a cable owned by Telstra Multimedia (a subsidiary of Telstra Corporation) which is, or will be, capable of also transmitting telephony and data. Foxtel provides a satellite service in some capital cities outside the area cabled by Telstra Multimedia. Telstra Corporation is a listed company and was previously a government-owned monopoly in relation to telephony in Australia. Optus TV is a subsidiary of Cable & Wireless Optus Limited ("Optus") which was a listed company, but was recently taken over by Singapore Telecom which is based in Singapore but which is also now listed in Australia. The Optus pay television service utilises the Optus cable, which also is, or will be, able to transmit telephony and data. Optus and Telstra Corporation compete in the supply of telephony and data. 6 Each of the pay television services operates by way of subscription, that is, the consumer must become a subscriber in order to receive the service. Each service offers a number of channels supplying particular forms of entertainment. Sport is recognised as one of major enticements for consumers to become subscribers to pay television - major sport in particular is described as a "subscription driver". This is complicated in Australia because of what are called the anti-siphoning rules laid down as part of the regulatory regime governing television which reserve certain major sporting events for free-to-air television, at least in the first instance. 7 Fox Sports supplies channels for pay television. It holds pay television broadcasting rights to a number of Australian sporting events and overseas sporting events which it packages into channels which it supplies to Foxtel and Austar on the basis of one full-time channel and one part-time channel. Fox Sports is owned jointly by PBL and News, who hold 50% each. C7 also holds pay television broadcasting rights in relation to a number of Australian and overseas sporting events which, until the end of the 2001 season, included all matches conducted under the auspices of the AFL. These rights are packaged as a full-time channel and a second part-time channel. The two channels are supplied by C7 to Optus TV and are provided to Optus TV subscribers in what is called a "sports tier" for which they pay a monthly fee in addition to the subscription fee for the basic channel access package. In addition to the two C7 channels, Optus TV offers an ESPN channel (ESPN being a major US-based supplier of sports channels) and a National Rugby League channel. The full-time C7 channel is provided to Austar as part of what is called a "deluxe tier" involving a supplementary subscription. The Austar basic tier includes the Fox Sports channels. According to the evidence, Optus TV has approximately 263,000 subscribers, Foxtel has approximately 724,000 subscribers and Austar has approximately 420,000 subscribers. 8 There are, effectively, three commercial networks offering free-to-air television in Australia - the Seven Network, the principal of which is Seven, the Nine Network ("Nine"), the principal of which is PBL (a listed company with Mr Kerry Packer as Chairman) and the Ten Network, the principal of which is Ten Network Limited ("Ten"), a listed company with connections with a Canadian company. A number of regional operators participate in these networks outside the capital cities. 9 News is the largest publisher of newspapers in Australia. Mr Rupert Murdoch is the Chairman. It has substantial media interests overseas, including television. There are restrictions upon cross-media ownership in Australia which prevent News controlling any free-to-air television station here. There are also foreign ownership provisions which would inhibit that. The cross-media restrictions inhibit PBL from publishing newspapers. Prior to these restrictions, PBL had interests in newspapers and News had interests in television stations. 10 There is evidence which, if accepted, would establish that the most important sporting rights for television broadcasting, so far as Australia is concerned, are Australian rules matches conducted by the AFL, rugby league matches conducted by the NRL, rugby union test matches and rugby union Super Twelve matches, and international cricket tests and international one-day cricket matches. AFL matches are regarded by some as the most significant of these. 11 The free-to-air and pay television rights to broadcast AFL matches were held by Seven for many years, until recently. Up until August 1998 Seven had granted a sub-licence to broadcast AFL matches to Sportsvision Pty Limited, which was a channel supplier to Optus TV. From late August 1998 C7 took over the channel production function formerly carried out by Sportsvision Pty Limited and produced its own channels incorporating AFL matches which were supplied to and broadcast by Optus TV. In early 1998 Seven commenced discussions with Foxtel concerning a possible grant by it to Foxtel of a licence to broadcast AFL matches. Those negotiations continued with C7 after it was formed in mid 1998. Those negotiations were never finalised. In September 1999 C7 made a request to both Foxtel and Telstra Multimedia for access to the cable utilised by Foxtel under the compulsory access regime contained in Pt XIC of the TP Act. That process has been resisted at all points. The evidence traces the course of that process and the commercial negotiations. I need not set out the detail here. There have been various decisions of this Court relating to the process. There are issues as to what success in obtaining access under the regulatory regime would mean in practice so far as broadcasting of C7 programmes is concerned. 12 It is submitted for C7 that the refusal by Foxtel to take the C7 channel must have been motivated by the desire to hurt a competitor rather than advance its own interests as this involved rejecting the ability to broadcast the popular AFL matches on what C7 say were attractive terms. It is submitted for Foxtel that whether or not to take the C7 channel was a commercial decision entirely a matter for Foxtel and, further, that it was not surprising that it would oppose the compulsion involved in the application of Pt XIC. All that needs to be said is that the contention by C7 has some basis and might ultimately be accepted. It gains support from the following evidence (albeit hearsay). 13 Firstly: "… I am also informed by Peter Gammell, a director of Seven Network, that he attended a cocktail party at Mrs Macquarie's chair on 4 November 1999. In attendance at the party were Mr Nick Falloon (who was at the time CEO of PBL, and a board member of Foxtel), and Mrs James McLachlan (CEO of PBL Enterprises and an alternate director of Foxtel). Mr Gammell informs me, and I believe, that he, Mr Falloon and Mr McLachlan had a discussion concerning the ongoing litigation in relation to C7's attempts to obtain access to the Foxtel Cable during which a conversation to the following effect took place: Mr Falloon said: Hell will freeze over before C7 gets onto Foxtel - you're never going to get on to the system Mr Gammell said: All you've ever tried to do is kill C7 Mr Falloon then said: You are a competitor, you are just not going to get on" 14 Secondly, the following evidence was given concerning meetings between Seven and the AFL: "95. From 31 July 2000 there were a number of meetings between Seven Network representatives including me, and the AFL. During the course of these meetings, Seven Network representatives said on a number of occasions words to the following effect: We are still pursuing the compulsory access process, and we will get on the Foxtel cable. On one occasion, in response to this observation, Graeme Samuel said to me words to the following effect: Foxtel have told me you'll never get on. I said words to the following effect: Well of course they'd say that, but don't believe them. We will get on. 96. At a further meeting, on a date I cannot recall, Graeme Samuel said to me words to the following effect: Look, you [Seven Network] want to get on Foxtel and you're trying to force your way on with the access dispute. But even if you win access to the Foxtel cable in the courts you will still have to do a commercial deal with News, Telstra and PBL before you will get on as a practical matter. And commercially they're just not going to do that deal with you. They will always find some way to keep you off when it comes to the crunch." 15 Thirdly, the following evidence was given in relation to negotiations with the NRL: "14. On Monday morning, 13 November 2000, I attended a meeting at the NRL offices at Fox Studios. Present at the meeting were David Moffett and the NRL in house lawyer, David Gallop. The C7 representatives were Harold Anderson, Steve Crawley, who is the General Manager in charge of Production for C7, and me. During the course of this meeting, Mr Moffett said words to the following effect: Foxtel have told us that you're never going to get onto Foxtel. I said words to the following effect: We are using the access regime to get on to the cable, and we are confident of winning that. Mr Moffett then said words to the following effect: Well, I don't understand that. I'm just being told by people who should know, that you're never going to get there. 15. During the course of the meeting on 13 November 2000, amongst other things Mr Moffett also said words to the following effect: The reason we are concerned about the fact that you are never going to get on Foxtel is, we are concerned that the NRL has the widest possible audience reach, and that is not possible if you are not on Foxtel. 16. I am informed by Peter Gammell, a director of Seven Network, and believe, that on a date in mid to late November 2000, he and Harold Anderson attended a meeting with David Moffett, Nick Polites and Colin Love, who are directors of the NRL. David Gallop was also present. Mr Gammell informs me, and I believe, that during the course of this meeting a conversation took place in words to the following effect: Mr Moffett said: Foxtel have told us that you're never going to get onto Foxtel. Mr Gammell said: That is factually incorrect. You're only being told one side of the story by News. We have won the protected contractual rights litigation and, with the assistance of the ACCC, we are confident of winning access to the cable. You should get your own advice about this and not rely on what News tells you. Mr Polites said: Well, that's interesting. We have never heard it put that way." 16 There is evidence that, until the events which have sparked this application, the arrangements for NRL matches was that Nine had an exclusive right to two free-to-air matches per week for eight years after 2000 and that News had what was called a "first and last" option in relation to pay television rights for twenty five years, but with Optus having a right to match whatever News pays. At that stage both Foxtel and Optus TV broadcast some NRL matches. So far as rugby union matches are concerned, the free-to-air and pay television rights are held by News. News sub-licenses to Seven those test matches on the anti-siphoning list. Seven also has a sub-licence to show some of the Super Twelve matches on free-to-air, but delayed. News sub-licenses to Fox Sports all the pay television rights to rugby union matches, including delayed coverage of those matches on the anti-siphoning list. The free-to-air television rights to test cricket matches and one day international cricket matches played in Australia are held by Nine and the pay television rights to those events are held by Foxtel or Fox Sports. Certain other international cricket rights are or have been held by other parties, including Seven. 17 It is necessary to deal with the events relating to the television rights to broadcast NRL and AFL matches in more detail. In so doing, I do not purport to find facts or weigh the evidence as if on final hearing. My task is to examine the facts and matters put forward by C7 in order to satisfy the test in O 15A r 6. As is often appropriate in such an application, no evidence has been led by the respondents and there has been no cross-examination. I should say that I have not limited myself to considering evidence which is in a form which would be strictly admissible at a final trial. During the hearing I ruled that press reports and other hearsay material were not necessarily excluded on that account. The issue against which the admissibility of evidence is to be tested is whether there is reasonable cause to believe that the applicant may have the right to obtain relief. This does not tender an issue of fact in the usual way. Furthermore, the proceeding is, in essence, interlocutory. My approach to the press reports and other hearsay reports (such as judgments of the Court in other cases) is to have regard to them to the extent that they help to fix dates and times of known events, where a sourced fact is reported rather than speculation or opinion, or where, for example, a press release by one of the respondents is reported. Another circumstance where I have had regard to them is where C7 has raised the contents of a press report with a respondent and sought a reaction. A good example of the appropriate use of press reports in this context is the decision of Davies J in Hughes Aircraft Systems International v Civil Aviation Authority (NG 913 of 1994 Fed, 28 June 1995) particularly at pars [8] to [11]. It will become apparent from what follows that I have made limited use of this kind of material. 18 It is necessary to recall a little history concerning television and rugby league in Australia. PBL has had a long connection with rugby league television broadcasting. When News proposed and sought to implement a plan for a breakaway "Superleague", PBL and Optus combined to defend the then established competition conducted by Australian Rugby Football League Limited ("the ARL") and substantially funded the continued operation of it. At that stage PBL had a 5% interest in Optus TV and no interest in Foxtel, which was then beneficially a 50:50 venture between News and Telstra Corporation. Proceedings in this Court as to Superleague commenced on 30 March 1995 and the judgment on appeal was delivered on 4 October 1996. On 19 December 1997 the ARL and News each publicly announced details of an in principle agreement to settle the Superleague dispute, which was formalised in 1998. It was agreed that there would be one competition, effectively being a joint venture between the ARL and News under the name of the NRL. The formalities apparently were that National Rugby League Investments Limited, a subsidiary of News, and the ARL entered into a partnership trading under the name "National Rugby League Partnership" and, in turn, entered into a services agreement with NRL, a not-for-profit company limited by guarantee and beneficially owned equally by the ARL and News. There had been newspaper reports of agreements between PBL and News at various times from December 1995 onwards. 19 In October 1998 it became public that PBL had acquired a 25% interest in Foxtel from News. PBL sold its interest in Optus TV at some stage which is not clear on the evidence. It is also not clear as to precisely when and in what circumstances the pay television rights to the NRL competition were divided between Foxtel or Fox Sports, on the one hand, and Optus, on the other. Previously, Optus had televised the ARL games and Foxtel had televised the Superleague games. The rearrangement presumably took place at the time of the overall settlement. 20 C7 understood that the existing arrangements between NRL and Foxtel or Fox Sports in relation to the acquisition of pay television rights to the NRL matches was to expire in December 2000. Late that year, C7 formed the view that it should bid for the NRL pay television rights as a survival plan, in the event that C7 lost the AFL rights which were then under active negotiation. There was considerable press speculation that Seven would lose the AFL rights. 21 During the course of the second half of 2000, C7 personnel had made it known to officers of the NRL that it was interested in acquiring pay television rights. That interest was formalised by a letter of 19 October 2000 to the Chief Executive Officer of the NRL. C7 was in some difficulty because it did not know what the precise arrangements were and what was precisely proposed. This was clarified by a letter dated 8 November 2000 from the Chief Executive Officer of the NRL which included the following: "Your description of our conversation is not entirely accurate. Put simply, we are happy to receive a proposal from you in respect of Pay TV rights for rugby league matches conducted under the authority of the NRL Partnership. That said, we are under no obligation to engage with you in any tender process in respect of those rights, to respond to any proposal, or to refrain from conducting our affairs as we see fit. In respect of your numbered queries, the answers are either confidential to the parties to the various current contracts or matters of detail which we do not believe it is necessary to go into. In any event, we are happy to provide you with the following information: 1. The NRL Partnership is looking to grant Pay TV rights in Australia for the remaining weekly NRL matches after Channel 9 choose their 2 matches … plus replay matches rights to the Final series, State of Origin, domestic test matches and the Channel Nine weekly matches. 2. The current Pay TV operators mount and produce coverage of matches and in certain circumstances are obliged to provide a feed to regional free-to-air broadcasters. 3. The broadband or internet rights are not part of the rights to be granted to Pay TV but we anticipate a hold-back on the broadcast of matches via that medium will be necessary. I would ask that you provide us with any proposal by 5pm Friday 10 November 2000." 22 This culminated in an offer being made by C7 on 5 December 2000 for the pay television rights consisting of $62.5 million cash per annum for seven years, based on one million subscribers to the pay television services carrying the NRL product. Lower amounts were offered in the event the number of subscribers was less than one million. In addition, C7 offered $4 million per annum as "contra". "Contra" is non-cash consideration, such as free advertising. The term is not generally used to refer to cost subsidisation, such as providing production facilities. Contra is valued by reference to the rate card generally used for advertising, that is, the standard non-discounted rate. In the case of the offer made by C7, contra was intended to cover free air time, primarily on the free-to-air Seven network, for NRL advertising. On 14 December 2000 C7 attempted to contact the NRL to put a revised offer for the pay television rights. By letter, C7 amended the amount payable where there were less than 500,000 subscribers. The terms of the offer were otherwise the same as that made on 5 December 2000, incorporating amendments made to that offer by letters of 7 and 12 December 2000. Those conducting the negotiations were unable to make contact with any representatives of the NRL in the course of 14 December 2000. 23 On 14 December 2000 the NRL put out a media release which stated: "The National Rugby League has announced the biggest Pay Television rights fee in Australian history, unveiling a six year contract with Fox Sports. The total value of the deal is almost $400 million dollars and promises Rugby League will reach the biggest subscription television audience in Australia as a part of the "basic channel package". Optus will also be offered the same right to broadcast matches. "This is a tremendous boost for the game of Rugby League", NRL Chief Executive, Mr David Moffett, said today. "Importantly, it guarantees that matches remain on the basic service for more than 1.1 million subscribers with a potential reach of four million viewers, by far the largest number in the country. Fox Sports' offer makes it clear that no matches will be moved to pay per view, which was an important consideration for our fans …" (emphasis added) 24 The relevant officer of C7 gave evidence that he assumed from that release that the annual value ascribed to the offer made by Fox Sports was up to $66.7 million. He then gave the following evidence: "24. Around January 2001 I had a conversation with Mr Mike Lattin, who was Chief Executive, Optus Television until April 2001. 25. In that conversation Mr Lattin said to me words to the following effect: As part of the resolution of the SuperLeague dispute there is an agreement between Optus and the NRL which provides that Optus has the right to match whatever News pays for Pay TV rights to NRL matches. This lasts for a 25 year period. Under that agreement, News has told us we can match their offer which was $30 million per annum for 6 years. Fox Sports has also offered to provide us with NRL content for $16 million, for one year only. This is on the basis that the channel will be fully produced by Fox Sports. We have rejected the opportunity to match the News offer, as that represents too much of a commitment in the current environment. But we will accept the offer from Fox Sports. Fox Sports through Jon Marquard and David Malone have told me that $16 million is about half the sum they are paying for these rights, including production costs. 26. I had previously spoken to Mr Lattin about the possibility that if Optus obtained rights to the NRL that C7 would negotiate with Optus to share the costs of acquiring those rights so that it could be included as part of the C7 channels. In the conversation I have referred to in paragraph 24 above, I said to Mr Lattin words to the effect: Can we do a deal inserting the NRL in C7 as we have in the past? He said words to the effect: Fox Sports have said that if they supply us with NRL it will only be on the basis that it is part of a channel that is owned and branded 100% by Optus. There's no doubt they're trying to exclude C7. They say they want to protect the NRL brand, but that doesn't make sense to me because it's OK for us to brand the channel Optus Sports. 27. On the basis of what Mr Lattin told me, I assume that the annual amount referred to in the NRL media release as to be paid by Fox Sports must have included up to $33 million in contra. In the case of News and Foxtel, I also assume, based on my experience in the industry, that "contra" would comprise primarily editorial support, given that advertising on Foxtel would be valued at a relatively low rate, and News did not have a free to air television station. Editorial support could include agreement to provide an agreed number of pages of stories covering NRL in News newspapers. In contrast, the annual cash component of the C7 bid was $62.5 million, on the assumption that at least 1 million subscribers had access to the service. Even on an assumption of subscriber numbers between 500,000 and 1 million, the cash component of C7's offer of 5 December 2000 was $48.5 million, and for less than 500,000 subscribers, $36.5 million." 25 On 16 December 2000 the NRL announced Telstra Corporation as the naming rights sponsor of the NRL competition for the next six years, which was the first major sponsor of the competition which had been attracted since the establishment of the NRL in 1998. 26 It was submitted for C7 that it can reasonably be inferred that the real value of the C7 offer was greater than the real value of the Fox Sports offer which was accepted and that the arrangement offered by Fox Sports to Optus was designed to exclude C7. 27 The announcement of the NRL decision was made at a critical time in relation to the negotiations for AFL rights. The Seven exclusive free-to-air and pay television broadcast rights for AFL matches were to expire at the end of 2001. A deed between Seven and the AFL set out a process with which the AFL must comply when it was to negotiate for the sale of rights to broadcast AFL matches for the period from 2002. Amongst other things, that deed gave Seven a first and last right of refusal in relation to any offer made to the AFL for the broadcast of AFL matches on free-to-air television in the period after 2001. The AFL would not commence negotiations until about March 2000, at which time Seven made an offer for free-to-air television rights, pay television rights, internet rights and naming rights for a global figure of about $75 million, including the value of free advertising entitlements known as "contra". That offer was not accepted. 28 In June 2000 there was press reporting of interest by Foxtel in the AFL rights for pay television. 29 On 18 July 2000 C7 wrote to the AFL following publication of an article in "The Australian" newspaper on 10 July 2000. The letter included the following: "Further to our recent discussion with Graeme Samuel indicating that the AFL would not be ready to meet with us to discuss the rights until the 31st July, in order that you could complete your discussions with regard to the Optus Oval and MCG Broadcasting rights, I thought I would bring to your attention an article in the Australian on 10 July 2000, a copy of which is attached. The first paragraph of the article says that "Dominant Pay TV operator Foxtel has offered to deliver Australian Football to rivals Optus Television and Austar if the Australian Football League switches the Pay TV contract from Kerry Stokes Seven Network". The article goes on to say that "Foxtel, Seven Network's C7 pay channels and Telstra are believed to have all pitched for the contract which starts in the 2001 [sic] season". Whilst in good faith we take your reason for a delay as stated, we would like to point out that under the AFL First and Last Rights Deed of 3 September 1997 between the AFL and various Seven companies, the AFL cannot accept an offer for the Pay TV rights from Foxtel, Telstra or anyone else for that matter, nor can the AFL grant the Pay TV rights to anyone, until the free-to-air rights have been dealt with. … We look forward to meeting you on the 31st." (emphasis added) There was no response to this letter. A meeting took place between the parties on 3 August 2000 at which those present were handed a document by AFL representatives showing a possible disposition of various rights, with the pay television rights shown as split between C7 and Foxtel on a non-exclusive basis. 30 In November 2000 media articles appeared stating that a consortium was interested in bidding for the AFL broadcasting rights in which Nine, Foxtel and Ten were identified as members. On 1 December 2000 the Australian Financial Review claimed that the consortium bid was being co-ordinated by Mr Ian Frykberg from News. 31 On 15 December 2000 (the day after the announcement of the decision concerning the NRL television rights) those bidding for the AFL rights made separate presentations to the AFL. The C7 interest was represented by Seven. On 19 December 2000 the AFL put out a media release as follows: "The Australian Football League this evening announced that the proposal by a consortium consisting of News Limited, Channels 9 and 10 and Foxtel for the broadcast rights for AFL football from 2002 had been accepted. The CEO of the AFL, Mr Wayne Jackson said that the decision had come after a long and exhaustive process, and that the proposal was accepted because it delivered the best possible coverage of the game for football fans, additional financial support for clubs and, importantly, grassroots development, as well as increased promotional opportunities for football nationally." 32 A Foxtel media release of the same date included the following: "I would also like to congratulate News Limited for its vision and leadership in bringing the AFL and Foxtel together" Mr Blomfield said. FOXTEL already provides Australia's leading pay-TV sports service and our new relationship with the AFL will be of tremendous additional appeal to our subscribers. … FOXTEL will make its AFL coverage available to all pay-TV homes across Australia by offering it non-exclusively to other pay-TV platforms. This means the AFL's pay-TV coverage would be available to almost 100 per cent of Australia's more than 6.5 million television homes. Currently, 1.4 million homes are connected to a pay-TV service with a potential audience of 4.5 million viewers …" (emphasis added) 33 Between May and September 2001 there was speculation in the press as to a deal which either had been or was to be done between the AFL and Telstra Corporation concerning internet rights variously referred to as being worth either $30 million or $25 million over five years. The evidence is that the internet rights under the then existing contract were granted in return for a percentage of total revenue derived from the official AFL website - that percentage increased from zero in 1998 to 5% in 2001. For the 1999/2000 financial year the applicable percentage was 3.5%. The revenue from the website was approximately $770,000 and the amount paid to the AFL in consequence was approximately $26,950. It was submitted for C7 that if the reported deal had been done in relation to the internet rights, then Telstra Corporation was paying a surprisingly large amount for those rights. 34 By letter of 18 October 2001 the solicitors for AFL advised the solicitors for C7 as follows: "… We are instructed to provide the following information: 1. News Limited acquired from the AFL the exclusive free to air and pay television broadcasting rights of AFL matches for 5 years, commencing in 2002. Although the AFL believes that News Ltd intended to sub license certain of the free to air and pay television rights, it does not have in its possession any document recording or evidencing any agreement or contract between News Limited and any other party regarding the "AFL rights from 2002". 2. The AFL did not sell the right to broadcast AFL matches on the internet to News Limited. As has been recently publicised, an agreement was reached between the AFL and Telstra with respect to the AFL internet rights within the last 2 months. The AFL does not have in its possession any document recording or evidencing any agreement or contract between Telstra and any other party regarding internet rights. …" 35 On 23 April 2001 News advised: "… News Limited acquired the Australian AFL free-to-air and pay television rights from the AFL. Certain of the free-to-air television rights have been on-sold by News Limited to each of Nine Network Australia Pty Limited and Network Ten Pty Limited. The pay television rights have been on-sold by News Limited to FOXTEL Management Pty Limited. News Limited did not acquire the internet rights. No consortium was involved in the acquisition of the AFL rights. …" 36 It was reported that, in answering a question after the annual general meeting of News on 11 October 2001, Mr Murdoch said that News was really just an intermediary for Nine, Ten and Foxtel in the $100 million a year AFL "swoop". 37 Mr Wise ("Wise"), the Managing Director of New Media and Investments at Seven, who has management responsibility for C7, says the following as to the effect on C7 of the loss of the AFL rights and the failure to obtain the NRL rights: "120. Following the loss of the AFL rights and the failure to obtain the NRL rights, Seven Network and C7 do not have any rights, or any substantial rights, to any of the Major Sports Competitions for the period post 2001. In my opinion, without rights to any of the Major Sports Competitions, C7 will be unable to compete effectively in the premium sports market past the end of 2001. Given that the contracts for the broadcasting rights to Major Sports Competitions will remain on foot for several years, I anticipate that C7 will be unable to compete in that market for some considerable time. Further, by reason of Seven Network's loss of the rights to broadcast AFL Matches at the end of 2001, from February 2002 C7 may no longer be able to broadcast AFL Matches on pay television. In my opinion it is likely, therefore, that C7's agreements with Optus and Austar for the supply of the C7 channels will come to an end in February 2002. Those agreements are conditional upon C7 continuing to hold the exclusive pay television rights to AFL Matches. … 123. The pay television rights to AFL Matches from 2002, and the NRL from 2001, are of pivotal importance in the Australian pay television industry. Without these rights, it will be difficult for C7 to compete with other channel suppliers in offering major sports competitions on pay television. Additionally, it will be difficult for C7 to compete in any effective manner with Fox Sports. If C7 had been given access to the Foxtel Cable, then C7 might have hoped to attract some of the subscribers who wished to see AFL Matches in the 2001 season, and also some of the other sports available on C7. As each week passes without access to the Foxtel Cable the potential to attract new subscribers has diminished. Without a significant driver for subscriptions after 2001, C7 would be unlikely to offer a competitive sports service to Fox Sports after the end of 2001. C7's survival at all after 2001 may depend upon C7 focussing more on other (non-sport) forms of programming. Further, the possible termination of the Optus contract, as referred to above, could deprive C7 of a very significant proportion of its revenue, making it more difficult for C7 to survive. 124. Without C7 operating as a competitive sports service to Fox Sports, Optus will not have any competitive sports service to offer to its subscribers. Without a competitive sports service, Optus is likely to find it increasingly difficult to attract new subscribers and retain existing subscribers. Foxtel is likely to become increasingly dominant in metropolitan areas. Further, Fox Sports is likely to become the dominant, or possibly the only, major sports service available on Australian pay television. This will also increase Foxtel's and News' bargaining power in relation to the sale of Fox Sports to Austar. Austar's reliance upon Foxtel for Fox Sports will make it unlikely that Austar will be able to compete effectively with Foxtel. Even if, as has been indicated by some media reports referred to above, Foxtel offers some AFL rights to Optus, the circumstances that Optus is reliant upon its competitor for the supply of its sporting content will reduce Optus' ability to compete effectively with Foxtel in the pay television market." 38 As I noted earlier, since 1995 there have been newspaper reports of agreements, written and unwritten, entered into between News and PBL said to have covered matters such as pay television content, television sporting rights and ownership interests in the media, both television and print. After referring to a number of these articles, Wise says: "133.Based on this material, and the other matters referred to in this affidavit, it appears to me that either some of the agreements which may already exist may include provisions which would be relevant to the grant of pay television rights in relation to the AFL and NRL referred to in this affidavit, or that there may be other agreements between those parties which deal with that subject matter." This is the basis for the documents which are sought in par 4 of the application. In this connection, it is to be noted that the acquisition of 25% of Foxtel by PBL from News was acknowledged to be the result of an anterior agreement between those companies. 39 I turn to consider the first issue arising under O 15A r 6. The written submissions for C7 proposed a large number of possible breaches of the TP Act by various parties, involving various possible markets. In the course of his oral submissions, counsel for C7 emphasised some of these breaches, ignored others and proposed some further alternatives. In his reply, counsel suggested still further alternatives. Counsel for the respondents have sought to deal with and dispose of all of these alternatives. The rule requires (at the least) that there must be reason to believe that C7 may have a case. The test is objective. It has been said that: "While it is not necessary for the applicant to demonstrate a prima facie case, it is not enough merely to assert that there is a case against the prospective respondent" (Hooper v Kirella Pty Ltd (1999) 96 FCR 1 at [39]) The rule envisages what can be described as fishing, provided that an objective basis for this is disclosed, and is to be given a beneficial construction (per Burchett J in Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728 at 733; per Gummow J in Aitken v Neville Jeffress Pidler Ltd (1991) 33 FCR 418 at 422). In my opinion, there is an adequate objective foundation in the present case to comfortably meet the test. The circumstances go well beyond mere assertion. In my view, arguments of the length and elaboration on all sides on this application are not envisaged by or necessary in order to satisfy this rule. They would have done justice to a final hearing. A prima facie case does not have to be demonstrated.