Major Lawsuit over Australian Television Rights

I admit to knowing nothing about Australian Football, a sport whose final will be played this Saturday. All I know is that it must be big business, because it is the subject of a billion-dollar lawsuit in a Sydney federal court. (Arnold, "Media barons head to court in war over Australia's TV future," Int. Herald Trib., 09/11/05).

Seven Network, controlled by the self-made billionaire Kerry Stokes, is suing a group of companies, including News Ltd., which is controlled by Rupert Murdoch, and Publishing & Broadcasting, controlled by Kerry Packer, for 1 billion Australian dollars, or $774 million, alleging that the companies conspired in 2000 to kill off Seven's cable sports network and create a monopoly in pay television. They did so, the suit alleges, by snatching the rights to broadcast the league's games for Foxtel, the cable broadcaster jointly owned by News Ltd., Publishing & Broadcasting, and the government-controlled telecommunications provider Telstra.

This fight stems from a long-running war between Australia's television providers.

Unlike in the United States, where cable companies were given geographic monopolies and then regulated on price, Australia chose to let all comers compete for subscribers, laying cable along the same streets and competing for content.

As a result, Stokes, Murdoch and Packer have been locked in a bitter fight that analysts estimate has cost them 8 billion dollars collectively and stunted the growth of cable TV in Australia. Only one of every four Australian households has cable, compared to three of every five in the United States.

The case, which is supposed to last nine months and involve over 80,000 documents, could have a long-standing impact on sports television rights in Australia, and an adverse judgment against any of the companies could affect stock prices and US subsidiaries.

For more, see updates from Reuters and Bloomberg.

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