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Australian Leagues Challenge Singtel iPad Rebroadcasts

March 13, 2012

Konrad Hurrell of the Warriors is tackled during the round two NRL match between the Parramatta Eels and the New Zealand Warriors in Sydney. Photographer: Mark Kolbe/Getty Images

Konrad Hurrell of the Warriors is tackled during the round two NRL match between the Parramatta Eels and the New Zealand Warriors in Sydney. Photographer: Mark Kolbe/Getty Images

The Australian Football League, the most popular spectator sport in the country, and the National Rugby League are waging a court battle to protect broadcasting rights valued at more than a billion dollars.

The two sports organizations asked a federal appeals court in Sydney today to overturn a judge’s ruling that cleared the way for Singtel Optus Ltd. (CWO) to show sporting events over mobile devices with only a slight delay and without having to pay for broadcast rights. Optus calls the service “TV Now.”

“This business has been developed to disrupt the commercial arrangements” the NRL and AFL have with their exclusive broadcast partners, Noel Hutley, the NRL’s lawyer, told a three-judge appeal panel.

The AFL signed a five-year, A$1.25 billion ($1.3 billion) agreement last year with Seven West Media Ltd. (SWM)’s Seven Network, Foxtel, Australia’s biggest pay television operator, and Telstra Corp. for exclusive broadcast rights to its games. The NRL is in talks with broadcasters on a new deal that would run from 2013 to 2017. Both agreements are at risk of dilution, as are those for this year’s London Olympic Games, if the rebroadcasts are allowed and other operators adopt similar technologies.

“They are not paying for it. They are lifting it,” Andrew Demetriou, chief executive of the AFL, said in a telephone interview last week. “It is akin to stealing and all it will do is that if sports can’t rely on that revenue, they will slug the consumers.”

Video Files

TV Now, which Optus started in July last year, allows the phone company’s customers in Australia’s mainland state capitals of Sydney, Melbourne, Brisbane, Adelaide and Perth to record free-to-air television programs, including AFL and NRL games, and play them back on computers, Apple Inc. iPads, and most 3G mobile devices.

Optus, the Australian unit of Southeast Asia’s biggest phone company Singapore Telecommunications Ltd. (ST), picks up free- to-air TV digital transmissions of 15 signals, including the free-to-air networks of Channel 7, Channel 9 and Channel 10. Those broadcasts are converted into four types of video files, such as QuickTime for playback on Apple devices, which are stored on the company’s servers, effectively cloud storage.

“Optus stands by its TV Now product and we intend to continue leading the market with converged, innovative and differentiated digital services,” the company said in an e- mailed statement.

Recording Options

Optus customers can record selected programming, which is streamed to their devices. The company offers 45 minutes of recording time for free and as much as 20 hours for A$9.99 a month. The recorded shows can be viewed within two minutes of their airing on Apple devices.

AFL, NRL and Telstra, Australia’s biggest phone company, sought to stop Optus, saying the service infringed their copyrights because it made the recordings and passed them on to its customers.

Federal Court Judge Steven Rares last month rejected the argument, ruling the user of the phone, computer or tablet made the recording, much as people used to do with video cassette recorders or with digital video recorders.

The users made the recordings “for their private and domestic use” to watch at a more convenient time “even if they watched these ‘near live’ within minutes of the start of the broadcast,” Rares wrote in his Feb. 1 ruling.

Place Not Time

The Optus service gives customers a more convenient place to watch the broadcasts, rather than a more convenient time, as the law requires, Hutley said today.

“Watching an NRL game while sailing on Sydney Harbor is more convenient” than going home later and watching a recording from a DVR, Hutley said.

Rares’s decision, the first of its kind, has prompted the AFL, NRL, other sports organizations and broadcasters to press the federal government to change copyright laws and prohibit the practice.

“This development is clearly an example of the technology overtaking the law,” David Gallop, the National Rugby League’s chief executive officer, said at a Feb. 10 news conference. “It couldn’t have come at a worse time to have this sort of uncertainty,” he said, referring to the negotiations on broadcast rights that are ongoing.

Confidential Talks

The talks with the government are currently confidential and Demetriou said he couldn’t discuss the details of the changes the sports groups are seeking. He said the government and the opposition have reacted positively to the groups’ concerns.

“They understand the urgency,” he said. “Our season is about to start.”

The AFL season kicks off March 24 with Sydney taking on Greater Western Sydney. It’s scheduled to conclude Sept. 29 with the AFL grand final, Australia’s Super Bowl.

Last year’s AFL grand final had a TV audience of 2.6 million people in the nation’s mainland capital cities while the deciding NRL game attracted 2.2 million, according to market researcher Oztam Pty. which compiles Australian TV ratings.

Broadcast rights account for 60 percent of the league’s revenue, Demetriou said. The organization uses the money to reinvest tens of millions dollars into the community, including building training fields and running children’s and indigenous programs, he said.

London Olympics

According to the Australian Bureau of Statistics, Australian Rules Football was the most popular sport attended by people aged 15 years or older in the nation in 2010, with 16 percent, or 2.8 million people, saying they went to a match.

Rares’ ruling may have implications for the broadcasts of this year’s London Olympic Games.

Nine Entertainment Co.’s Nine Network and Foxtel paid a record A$126 million for the rights to broadcast the London Olympics and the 2010 Winter Games from Vancouver.

According to the ruling, telecommunications providers could give access to any free-to-air broadcast to their customers.

The International Olympic Committee didn’t respond to an e- mailed request for comment.

Attorney General Nicola Roxon said on Feb. 8 that she asked the Australian Law Reform Commission to review current copyright laws. Terms of the review are still being drafted.

Copyright Exemptions

Australian law provides exemptions from copyright protection when people record a television show at home for personal use, or transfer a music file from a computer to a digital music player such as an iPod or an iPhone.

Optus based a commercial offering on this exemption, Fiona Phillips, executive director of the Australian Copyright Council, said in a phone interview.

“That’s a little bit of a distortion of the original public policy exemption,” she said.

The case is National Rugby League Investments Ltd. v. SingTel Optus Ltd. NSD201/2012 Federal Court of Australia, Full Court (Sydney).

To contact the reporter on this story: Joe Schneider in Sydney at jschneider5@bloomberg.net

To contact the editor responsible for this story: Douglas Wong at dwong19@bloomberg.net


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