Seven West Media ‘disappointed’ with ASIC action against Harold Mitchell over tennis rights deal

Seven says it’s “disappointed” by ASIC’s decision to launch legal action against Harold Mitchell over an Australian Open TV deal.

Prominent philanthropist and entrepreneur Harold Mitchell. Pic: Aaron Francis

Seven West Media says it is“disappointed” with the Australian Securities and Investments Commission decision to launch legal action against former advertising executive and Tennis Australia director, Harold Mitchell, for allegedly withholding information surrounding the Australian Open’s broadcasting rights deal.

The civil legal action also names a second former Tennis Australia director Stephen Healy.

ASIC’s case, which has been lodged in the Federal Court, centres on a decision made in 2013 by the Tennis Australia board to award the domestic television broadcast rights for the Australian Open tournament to the Seven Network for a five-year period without a competitive tender process.

A spokesman for Seven West Media said the company “is disappointed in ASIC’s decision announced today regarding the Tennis Australia Directors. Seven has co-operated fully with ASIC during this long and drawn out investigation.

As a bidder for the rights Seven, which had an exclusive negotiating period under its contract, complied with the process dictated by Tennis Australia.

In Seven’s experience, Harold Mitchell and Stephen Healy always acted in a highly professional and proper manner, and are of the highest character and reputation.

As the matter is before the court Seven is unable to comment further.”

Meanwhile, Mr Mitchell would not return phone calls but when asked by The Australian via text message whether he had anything to say about the charges, he replied: “Nothing”.

Steve Healy told The Australian “I have received notice today that ASIC has commenced proceedings against me. I intend to vigorously defend the claim. “

Among its claims, ASIC alleges that both Mr Mitchell and Mr Healy withheld material information from the Tennis Australia board when it made its decision to award the domestic broadcast rights.

It also alleges the two failed to ensure that the board was fully informed about the value of the rights, the interest of parties other than the Seven Network in acquiring those rights and the best method of marketing them.

It also claimed the two failed to advise the board that Tennis Australia was likely to obtain better terms by putting the rights out to competitive tender.

ASIC also alleges that Mr Mitchell alone passed on to the Seven Network confidential information about the interest of its competitors in acquiring the rights.

It alleges Mr Mitchell passed on to Seven Network confidential information about the views and negotiating position of Tennis Australia’s management and board about the granting of the rights.

In a statement ASIC claimed Mr Mitchell downplayed to the Tennis Australia board the interests of parties other than the Seven Network in acquiring the rights and failed to inform the Tennis Australia board about the concerns that the Seven Network had over the interest of rival broadcaster Network Ten in acquiring the rights.

Mr Mitchell, the former chairman of advertising agency Mitchell Communications Group, was a director of Tennis Australia between October 2008 and October 2015. He was reappointed on December 2015. In October this year, Tennis Australia announced Mr Mitchell’s retirement from the board.

Mr Healy, the Australian region chief executive of law firm Dentons, was appointed a director of Tennis Australia between October 2008 and resigned on April 2017. Mr Healy was also the former president of Tennis Australia.

ASIC is seeking declarations that Mr Mitchell contravened three sections of the Corporation’s Act and that Mr Healy contravened one section of the Act.

ASIC is also seeking that pecuniary penalties be ordered against Mr Mitchell and Mr Healy and that both be disqualified from managing corporations. The maximum penalty for the breaches of the relevant section of the Corporations Act is $200,000.

In March 2018, Tennis Australia — after the expiration of a four-month exclusive negotiation period with the Seven Network — awarded the broadcast rights for the Australian Open for 2020 to 2024 to the Nine Network.