TV3's big court defeat

John Selkirk/Dominion Post

RESIGNATION: Brent Impey, who has a background in media law, announced today he will step down from the position he has held since 2000.

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OPINION: The case had everything from a private detective, to rugby, Paris, tropical islands, an archaic law and the dictionary definition of the word "target."

And it's a safe bet that TV3's masters at Ironbridge Capital will be a bit grumpy today.

That's because an Auckland District Court judge yesterday ruled in favour of the Ministry for Culture and Heritage. This means TV3's parent company, MediaWorks, faces a fine of up to $300,000 for broadcasting advertisements during its Sunday morning coverage of the 2007 Rugby World Cup.

Let's get this straight. A law that bans TV advertisements between 6am and midday on Sundays is certainly archaic. But it's still the law even if the law in this case is indeed an ass.

And MediaWorks' attempt to sidestep the law, to help recoup its multi-million dollar outlay on the World Cup broadcasting rights, always seemed too cute. It also came after MediaWorks unsuccessfully lobbied the government for an ad ban exemption.

Under the Broadcasting Act, it's possible to beat the Sunday morning ad ban if a programme's signal originates outside New Zealand, it is produced and transmitted simultaneously to both kiwi audiences and overseas viewers and is targeted primarily at audiences outside New Zealand.

The problem for MediaWorks is Judge Allison Sinclair didn't buy the argument that the games were targeted primarily at audiences outside New Zealand. And who would, given TV3 - along with the rest of us -was hoping for a much better showing from the All Blacks than the dismal quarter final exit.

Nonetheless MediaWorks set up production facilities in Paris so it could produce and transmit coverage from there. It also did a deal with Fiji TV whereby TV3's coverage was simultaneously broadcast through Sydney to Fiji and 16 other Pacific countries and territories including rugby hot beds Guam, New Caledonia, Papua New Guinea and the Northern Marianas.

MediaWorks argued that the combined population of the 17 was 9 million, easily outstripping New Zealand's 4 million. However, statistics presented to the court also showed 1.9 million TV sets here - a figure dating from 1997 - compared to just 360,951 across the 17 Pacific countries.

As the judgment notes, coverage broadcast to the Pacific carried TV3's ads, which of course were primarily from New Zealand companies targeting ah, New Zealanders.

Fiji TV wasn't allowed to screen its own ads and MediaWorks made no claim that either it or its advertisers derived any revenue from the Pacific Islands.

TV3 does not operate outside New Zealand so, as the judge notes, its business objective in obtaining the World Cup rights could only have been to develop its viewer relationships and its brand in New Zealand.

"I find therefore that the whole of the programme (including the advertising) was targeted primarily at a New Zealand audience," the judge concluded.

She also dismissed MediaWorks' claim that the Sunday morning ad ban somehow breached the Bill of Rights by limiting freedom of expression.

But it's also worth noting the Ministry for Culture and Heritage certainly didn't penny pinch in its pursuit of TV3. It told the court how it hired a private detective to watch the rugby broadcasts.

The Ministry also provided the judge with the Shorter Oxford English Dictionary definition of "target", which it noted was a transitive verb.

MediaWorks' CEO Brent Impey must now be facing a few questions from the Ironbridge hierarchy. Back in 2007 Impey, who has a law degree specialising in media law, said he was very confident his company's actions would comply with the Broadcasting Act.

 The Australian private equity fund, remember, completed its $790 million acquisition of MediaWorks just months before TV3 screened the World Cup. Impey was paid a $3 million "change of control" payment by Ironbridge when it took control of the business from Canada's CanWest Global.

The case is now being set down for sentencing. 

*Gareth Vaughan is Fairfax Media's digital business editor.