Seven calls in Harold Mitchell as ‘independent’ cricket rights valuer

After he declined to give evidence in his recent civil battle with the Australian Securities and Investments Commission (ASIC), it was very interesting watching advertising Rich Lister Harold Mitchell be put through his paces for around three hours at the Crown Resorts inquiry in Sydney last Friday.

As The Australian’s Margin Call column noted on Saturday, Mitchell was a very relaxed and conversational witness, waxing lyrical on all manner of topics ranging from his weight loss discussions with James Packer, how Kerry Packer bailed him out with a $1.9 million loan in 1991 and the three “minor” breaches of his director duties at Tennis Australia, as determined recently by Justice Jonathan Beach, who largely exonerated Mitchell.

After nine years on the Crown board and having turned 78 this year, Mitchell’s days as a Crown director are surely numbered, if only because he demonstrated that he was way too close to the Packer family and therefore unlikely to qualify as a genuinely independent director in the period ahead.

His independence was also called into question at last year’s Crown AGM when he suffered a 27% protest vote despite receiving support from James Packer’s 36% stake.

As Crikey reported in August, Mitchell’s understanding of independence and conflict of interest was called into question by ASIC when it alleged he inappropriately leaked information from the Tennis Australia board, where he served as deputy chairman, to the Seven Network during TV rights negotiations in 2012-13.

If it wasn’t for the determined actions of then Tennis Australia CEO Steve Wood, Seven would have snaffled the rights for tens of millions less than what Harold was initially proposing they pay.

Crikey can also reveal that the tight relationship between Seven, its billionaire controlling shareholder Kerry Stokes, and Mitchell is continuing, after the network last week nominated him to be its independent valuer of the Cricket Australia TV rights, which are currently in dispute.

This is just the latest strange move by Stokes and Seven West Media, which is meant to be Cricket Australia’s broadcast partner but is instead throwing public rocks at the organisation and trying to wriggle out of its $82-million-a-year contract.

Kerry Stokes is worth an estimated $5.5 billion and has just spent a lazy $700 million on an almost 20% stake in building products company Boral. Why is a man of his means refusing to recapitalise his debt-laden media empire and instead pursuing a scorched-earth policy of attempting to screw over Australia’s cricketing community?

And after all that recent Federal Court exposure about the questionable way in which Seven West Media and Mitchell went about renewing the Tennis Australia contract in 2013, you would think Seven would be behaving impeccably in their dealings with other major contract partners such as Cricket Australia, and that Mitchell would be staying well clear of Seven.

But no, after successfully bludgeoning the AFL into an $87 million cut in its broadcasting fees from 2020-22, plus a two-year extension until 2024, Seven has now turned the blowtorch on Cricket Australia to do the same, and it wants Mitchell to back up its arguments.

Seven CEO James Warburton is leading the over-the-top campaign of denigration, and there has been lots of colourful media coverage — including calls for the Big Bash to be cancelled, plus exasperated claims that dealing with Cricket Australia is a “frustrating” mess.

Seven agreed to pay $82 million a year for the rights after a competitive tender and Cricket Australia is perfectly within its rights to insist that the water-tight contract be honoured, save for a potential adjustment this summer depending on how COVID plays out.

It was passing strange that the AFL agreed to a major reconfiguration and extension of its Seven contract, rather than just doing an amendment for the reduced number of games in 2020. AFL ratings have actually been up this year so it looks like the AFL may have ended up selling itself short.

This then set a precedent for other sports and we’ve already seen the likes of the A-League and rugby union take significant haircuts. Perhaps Cricket Australia should demand full payment from Seven and Foxtel and then use a small portion of the proceeds to offer top-up payments to struggling sports such as basketball, soccer and rugby union. A sports industry hardship fund, if you like.

As for dispute resolution processes, the Cricket Australia board should object to Harold Mitchell being some form of independent valuer on the TV rights contract and simply request that Seven ditches attempts at an arbitration and instead focus on delivering its contractual obligations.

Seven was due to make a $25 million payment to Cricket Australia in September and initially refused to pay, before grudgingly coughing up, albeit a few days late.

In the business world, honouring contracts is meant to be a scared concept — but with billionaire media moguls, these rules don’t seem to apply. Then again, Kerry Stokes is a strange beast; he’s continuing to fund the defamation action his Seven West Media employee, former Australian soldier Ben Roberts-Smith, is running against Nine.

If the Federal Court does indeed find that Roberts-Smith was up to no good in Afghanistan, the Stokes reputation could take a significant hit — not that he seems to care too much what people think of him.