ASIC sues renowned media figure Harold Mitchell for allegedly passing confidential information to the Seven Network to get it win the television rights for the Australian Open while he was on the board of Tennis Australia.
The Australian Securities and Investments Commission Investigation (ASIC) has launched Federal Court Proceeding against Tennis Australia’s former director Harold Mitchell and former president Stephen Healy after the investigations revealed that Tennis Australia’s 2013 decision to award broadcast rights for the Australian Open to Seven Network for a term of five-year did not follow the competitive tender process.
The corporate watchdog alleged that at the time of final decision to award the domestic broadcast rights, Mr. Mitchell and Mr. Healy had withheld material information from the Tennis Australia board.
They failed to ensure that the Tennis Australia’s Board was completely informed about the value of the rights, the interest of bidders other than the Seven Network in acquiring those rights and the best marketing methods, alleged the regulator.
In response to ASIC’s allegation, Harold Mitchell stated that he has always acted in the “best interests of tennis Australia.”
Entrepreneur, media buyer and philanthropist, Harold Mitchell is currently a Director of ASX listed casino giant Crown Resorts (ASX: CWN) and he further holds board position at the several other organizations, including the Florey Institute of Neuroscience and Mental Health, the New York Philharmonic, Free TV Australia and the Australia-Indonesia Centre.
Mr. Mitchell has been specifically alleged for providing confidential information relating to interest of its competitors in acquiring the rights to Kerry Stokes-backed Seven Network along with passing the internal views and negotiations undertaken by the Tennis Australia’s board and management.
The Federal Court hearing is due to be held on 30 November in Melbourne. However, ASIC seeks to attain orders to have Mr. Mitchell and Mr. Healy disqualified form managing corporations which could eventually force them to abdicate their board positions. The regulator further seeks to impose penalties, if applied the maximum penalty for a single contravention of the relevant sections of the Corporations Act could be $200,000.
Moreover, at the start of the year Channel Nine won the Australia open broadcast rights from rival network Seven in a deal of $300 million. The rights relate to the period of 5 years, from 2020 to 2024.
Following this news, stock of Seven West Media Limited (ASX: SWM) got dragged down 0.69% to last trade at $0.720 on 19 November 2018. Although, over the past one year, the stock has seen a decent performance change of +17.89%.
On the allegation against the Director Harold Mitchell, Crown Resorts’ shares took the downside in today’s trading session. The share of Crown Resorts Limited (ASX: CWN) fell 0.595% or $0.070 to close at $11.700 on 19 November 2018. Whereas, the PE multiple was 14.500 x with market capitalization of $8.01 billion.