ASIC investigating award of Australian Open broadcast rights

Tennis Australia is being investigated by the Australian Securities and Investment Commission for its 2013 sale of broadcasting rights to the Australian Open without a competitive bidding process.

The corporate regulator is reportedly investigating claims a conflict of interest involving prominent businessman and former Tennis Australia Director Harold Mitchell that may have influenced the decision to sell the television rights for the Australian Open to Seven West Media and how the television deal was handled by Tennis Australia's board led by President Steve Healy.

It is understood that Tennis Australia and Seven agreed to a five-year extension to the network’s broadcast deal, covering the years 2015 to 2019,  worth about $200 million without putting the deal to the open market.

It has been suggested that the deal may have undervalued the broadcasting rights by around $50 million.

At the time of the deal, Mitchell was Vice-President of Tennis Australia and Chairman of Aegis Asia Pacific, which had commercial dealings with Seven.

At that time, the Tennis Australia board was sharply divided over whether to extend its long-standing broadcasting deal with Seven West Media or launch a new competitive tender.

The board of Tennis Australia in 2013 included Healy, Dr Janet Young, Mitchell, Chris Freeman, Ashley Cooper, Jim Davies, John Fitzgerald, Graeme Holloway and Scott Tanner.

A spokeswoman for Tennis Australia defended the decision to award Seven the broadcast rights, stating “the current domestic broadcast contract is the largest in Tennis Australia’s history. It was rigorously negotiated in 2013 and created a platform upon which the organisation has grown global broadcast rights exponentially.

“A lot of public speculation about the deal is seriously misinformed and without any understanding of the true value of the deal, which was unanimously supported by the board.

“The strategic decision behind the agreement enabled a transformation of Tennis Australia’s media rights business including in-house production, transmission and sales. The additional funds have contributed substantially to major investment back into the sport.”

Commenting on the reported investigation to Fairfax, Tennis Australia Commercial Director Bruce McWilliam advised “a disaffected former board director has made the allegation notwithstanding they voted for the deal. The deal was a fantastic deal unanimously approved by the Board.”

Tennis Australia last year ordered an independent review into whether a serving board member in 2013 had an undisclosed material conflict of interest during the negotiations.

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