Case: HG v The Queen [1999] HCA 2 ; (1999) 197 CLR 414
Outcome: cited
Network Limited v News Limited (No 15) [2006] FCA 515 (8 May 2006) [ Home ] [ Databases ] [ WorldLII ] [ Search ] [ Feedback ] Federal Court of Australia You are here: &nbsp; AustLII &gt;&gt; Databases &gt;&gt; Federal Court of Australia &gt;&gt; 2006 &gt;&gt; [2006] FCA 515 [ Database Search ] [ Name Search ] [ Recent Decisions ] [ Noteup ] [ Download ] [ Help ] Seven Network Limited v News Limited (No 15) [2006] FCA 515 (8 May 2006) Last Updated: 9 May 2006 FEDERAL COURT OF AUSTRALIA Seven Network Limited v News Limited (No 15) [2006] FCA 515 EXPERT EVIDENCE admissibility of expert report - whether expert has necessary specialised knowledge to assess the importance of Australian sports broadcasting rights to Australian pay television operators Evidence Act 1995 (Cth) s 79 HG v The Queen [1999] HCA 2 ; (1999) 197 CLR 414 cited SEVEN NETWORK LIMITED and ANOR v NEWS LIMITED and ORS NSD 1223 of 2002 SACKVILLE J SYDNEY 8 MAY 2006 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 1223 of 2002 BETWEEN: SEVEN NETWORK LIMITED (ACN 052 816 789) FIRST APPLICANT C7 PTY LIMITED (ACN 082 901 442) SECOND APPLICANT AND: NEWS LIMITED (ACN 007 871 178) FIRST RESPONDENT SKY CABLE PTY LIMITED (ACN 069 799 640) SECOND RESPONDENT TELSTRA MEDIA PTY LIMITED (ACN 069 279 027) THIRD RESPONDENT FOXTEL MANAGEMENT PTY LIMITED (ACN 068 671 938) FOURTH RESPONDENT TELSTRA CORPORATION LIMITED (ACN 051 775 556) FIFTH RESPONDENT TELSTRA MULTIMEDIA PTY LIMITED (ACN 069 279 072) SIXTH RESPONDENT PUBLISHING AND BROADCASTING LIMITED (ACN 009 071 167) SEVENTH RESPONDENT NINE NETWORK AUSTRALIA PTY LIMITED (ACN 008 685 407) EIGHTH RESPONDENT PREMIER MEDIA GROUP PTY LIMITED (ACN 065 445 418) NINTH RESPONDENT AUSTRALIAN RUGBY FOOTBALL LEAGUE LIMITED (ACN 003 107 293) TWELFTH RESPONDENT NATIONAL RUGBY LEAGUE INVESTMENTS PTY LIMITED (ACN 081 778 538) THIRTEENTH RESPONDENT NATIONAL RUGBY LEAGUE LIMITED (ACN 082 088 962) FOURTEENTH RESPONDENT FOXTEL CABLE TELEVISION PTY LIMITED (ACN 069 008 797) FIFTEENTH RESPONDENT OPTUS VISION PTY LIMITED (ACN 066 518 821) SIXTEENTH RESPONDENT AUSTAR UNITED COMMUNICATIONS LIMITED (ACN 087 695 707) SEVENTEENTH RESPONDENT AUSTAR ENTERTAINMENT PTY LIMITED (ACN 068 104 530) EIGHTEENTH RESPONDENT IAN HUNTLY PHILIP NINETEENTH RESPONDENT NEWS PAY TV PTY LIMITED (ACN 085 095 487) TWENTIETH RESPONDENT PBL PAY TV PTY LIMITED (ACN 084 940 367) TWENTY-FIRST RESPONDENT SINGTEL OPTUS PTY LIMITED (ACN 052 833 208) TWENTY-SECOND RESPONDENT JUDGE: SACKVILLE J DATE OF ORDER: 8 MAY 2006 WHERE MADE: SYDNEY THE COURT ORDERS: 1. The tender of pars 5.129-5.178 and section 6 of Mr Kinsella's report dated 2 December 2004 ('the Report') be rejected. 2. The parties consider the application of this ruling to other parts of the Report and to Mr Kinsella's report in reply dated 25 July 2005 and his supplementary statement dated 5 October 2005, with a view to handing up agreed short minutes of order. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules . IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 1223 of 2002 BETWEEN: SEVEN NETWORK LIMITED (ACN 052 816 789) FIRST APPLICANT C7 PTY LIMITED (ACN 082 901 442) SECOND APPLICANT AND: NEWS LIMITED (ACN 007 871 178) FIRST RESPONDENT SKY CABLE PTY LIMITED (ACN 069 799 640) SECOND RESPONDENT TELSTRA MEDIA PTY LIMITED (ACN 069 279 027) THIRD RESPONDENT FOXTEL MANAGEMENT PTY LIMITED (ACN 068 671 938) FOURTH RESPONDENT TELSTRA CORPORATION LIMITED (ACN 051 775 556) FIFTH RESPONDENT TELSTRA MULTIMEDIA PTY LIMITED (ACN 069 279 072) SIXTH RESPONDENT PUBLISHING AND BROADCASTING LIMITED (ACN 009 071 167) SEVENTH RESPONDENT NINE NETWORK AUSTRALIA PTY LIMITED (ACN 008 685 407) EIGHTH RESPONDENT PREMIER MEDIA GROUP PTY LIMITED (ACN 065 445 418) NINTH RESPONDENT AUSTRALIAN RUGBY FOOTBALL LEAGUE LIMITED (ACN 003 107 293) TWELFTH RESPONDENT NATIONAL RUGBY LEAGUE INVESTMENTS PTY LIMITED (ACN 081 778 538) THIRTEENTH RESPONDENT NATIONAL RUGBY LEAGUE LIMITED (ACN 082 088 962) FOURTEENTH RESPONDENT FOXTEL CABLE TELEVISION PTY LIMITED (ACN 069 008 797) FIFTEENTH RESPONDENT OPTUS VISION PTY LIMITED (ACN 066 518 821) SIXTEENTH RESPONDENT AUSTAR UNITED COMMUNICATIONS LIMITED (ACN 087 695 707) SEVENTEENTH RESPONDENT AUSTAR ENTERTAINMENT PTY LIMITED (ACN 068 104 530) EIGHTEENTH RESPONDENT IAN HUNTLY PHILIP NINETEENTH RESPONDENT NEWS PAY TV PTY LIMITED (ACN 085 095 487) TWENTIETH RESPONDENT PBL PAY TV PTY LIMITED (ACN 084 940 367) TWENTY-FIRST RESPONDENT SINGTEL OPTUS PTY LIMITED (ACN 052 833 208) TWENTY-SECOND RESPONDENT JUDGE: SACKVILLE J DATE: 8 MAY 2006 PLACE: SYDNEY RULING ON EVIDENCE THE REPORT 1 The News parties have objected to the tender by the applicants ('Seven') of what is said to be an expert report prepared by Mr Kevin Kinsella. The report, which is dated 2 December 2004, addresses four questions: '(a) What drives subscriptions for pay television? (b) Which, if any, sports can be characterised as subscription drivers in the context of the Australian pay television industry? (c) What factors and considerations does a retail pay television operator typically take into account in deciding: (i) whether or not to acquire channels and if so on what terms; and (ii) whether to include a channel as part of a tier or basic subscription package? (d) What, if any, impact did the loss of the AFL rights from the commencement of the 2002 AFL season and the failure to obtain the NRL pay rights from the commencement of the 2001 season have on the ability of the Seven Network and C7 to pursue an integrated media strategy? ' 2 Like many of the expert reports prepared in this case, Mr Kinsella's reports are of excessive length. He has prepared three reports: the first report, a report in reply (25 July 2005) and a 'supplementary statement' (5 October 2005). The first report comprises 143 pages (excluding appendices); the report in reply is 89 pages in length; and the supplementary statement adds a further 73 pages to the mountain of material tendered in this case. 3 It seems that neither money nor length of exposition is any object in these proceedings. Neither, however, necessarily produces optimum forensic outcomes. Judges have repeatedly warned about the potential waste of resources involved in the preparation of elaborate expert reports that may turn out to be of little or no assistance in resolving the issues before the court. These warnings appear not always to have been heeded in the present case. 4 News objects to the entirety of Mr Kinsella's report. However, its principal concern appears to be with Mr Kinsella's opinions relating to so-called 'marquee sports'. Mr Kinsella's opinions on this topic include the following (par 4.1): (f) Given that they overcome consumer inertia and are frequently the catalyst for the consumer purchase decision, the most important single factor driving subscriptions is live and exclusive coverage of popular sports ("marquee" sports). (g) Consequently, there are certain fundamental ("marquee") sports rights that a retail pay television operator should acquire if it can do so (either directly or through a channel supplier). The value of such sports rights in building the network and a subscriber base goes beyond the directly attributable cash flows. (h) Only a limited number of sports are popular and attractive enough to be categorised as "premium" sports and still fewer possess the appeal, attributes and utility associated with "marquee" sports. (i) "Marquee" sports are distinguished, in part, by the depth and spread of their appeal to consumers, viewers and subscribers (they are amongst the most popular sports), in part, by social and cultural factors and, in part, by the greater utility they provide to (and for) television (most especially, pay television). ... (l) ...[W]ith respect to anti-siphoning regulation and other salient constraints, it is not necessary for pay television to have every match (or every available match) from a "marquee" sport or competition exclusively accessible for live broadcast on its channel(s) and/or service(s) in order to attain critical mass (albeit that such an approach might reasonably be expected to accelerate the time it takes the pay television operator to attain critical mass). (m) Given the above, whilst in and of itself it is not sufficient, "marquee" sports are a necessary pre-requisite for retail pay television operators seeking to attain critical mass and the most important single factor driving subscriptions. ' (Emphasis added.) 5 Mr Kinsella expresses the view that Seven Network had to pursue an integrated media strategy ('IMS') so as better to face the dual challenges of maintaining audiences and advertising revenues, while investing in necessary diversification to ensure growth (par 4.4(a)). He considers that the pursuit by the Seven Network of an IMS 'was a practical, proven and generally accepted option' (par 4.4(c)). In his view, however, the impact of the loss of the AFL rights and the failure to attain the NRL rights on the IMS was 'profound': 'Without access to such content (the AFL and the NRL) that could overcome consumer inertia and act as a catalyst to the consumer purchase decision, deriving value from producing and providing wholesale sporting or non-sporting channels would be, if possible, problematic and the return, if any, modest. The launch of a "stand-alone" retail pay television service would not have been feasible without such content' (par 4.4(e)). 6 News' principal objection to the admissibility of the report is that Mr Kinsella's opinions have not been shown to be founded on his specialised knowledge, based on his study, training or experience, as required by s 79 of the Evidence Act 1995 (Cth) (' Evidence Act '). Mr Whitford SC, who appeared with Mr Brereton for News, identified three sections of the report as being of particular concern: &#8226; pars 5.129 5.178, which contain Mr Kinsella's analysis of 'marquee sports'; &#8226; section 6 of the report, where Mr Kinsella considers which, if any, sports can be characterised as subscription drivers in the context of the Australian pay television industry; and &#8226; appendix 3, which explains the components of a 'marquee sports assessment matrix' adopted by Mr Kinsella in section 6 of his report. 30 The danger in this case is precisely that identified by Gleeson CJ in HG v The Queen [1999] HCA 2 ; (1999) 197 CLR 414, at [44], where his Honour observed that: ' Experts who venture "opinions" (sometimes merely their own inference of fact), outside their field of specialised knowledge may invest those opinions with a spurious appearance of authority, and legitimate processes of fact-finding may be subverted. ' 31 I do not think that Mr Kinsella has the specialised knowledge required for him to express an opinion on 'marquee' sports in Australia and their significance for Australian retail pay television operators. However, News' objection can be dealt with by concluding, as I do, that Mr Kinsella's reasoning process, as disclosed in his report, does not enable me to determine whether he has the necessary specialised knowledge, based on his training, study or experience, to express the opinions he has on those issues. This conclusion is sufficient to uphold the objection: HG v The Queen, at [39] per Gleeson CJ. 32 I therefore reject the tender of the parts of the report identified by Mr Whitford (see [6], above), other than appendix 3. Appendix 3 may be in a different category because, on one reading, it simply sets out criteria which in Mr Kinsella's opinion should be taken into account in assessing the significance of sports broadcasting rights for pay television in any country, including Australia. Whether that opinion is relevant or helpful may be a different question. 33 Mr Sheahan SC, who appeared with Mr Halley for Seven, put as a fallback position that the portions of Mr Kinsella's reports that are objected to should be treated as submissions. There also may be some other parts of Mr Kinsella's report that are not affected by my ruling. I therefore propose to give the parties an opportunity to consider these reasons before determining whether the whole or only parts of the report should be rejected. The parties should also consider the effect of the ruling in relation to Mr Kinsella's report in reply and supplementary statement. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Ruling on Evidence herein of the Honourable Justice Sackville. Associate: Dated: 8 May 2006 Counsel for the first, second, fourth, ninth, thirteenth, fifteenth, nineteenth and twentieth respondents: Mr P Whitford SC with Mr P Brereton Solicitors for the first, second, fourth, ninth, thirteenth, fifteenth, nineteenth and twentieth respondents: Allens Arthur Robinson Counsel for the applicants: Mr J Sheahan SC with Mr J Halley Solicitors for the applicants: Freehills Date of hearing: 4 May 2006 Date of judgment: 8 May 2006 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2006/515.html