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Regulator takes action against former Tennis Australia execs

The Australian Securities and Investments Commission has today (Monday) issued civil penalty proceedings in the Federal Court of Australia against former Tennis Australia directors, Harold Mitchell and Stephen Healy, in relation to their role in the 2013 decision that led the governing body to extend its rights deal with commercial broadcaster Seven without launching a tender process.

The Tennis Australia board made the controversial decision to extend its contract with long-time partner Seven for the Australian Open grand slam and other tournaments for a five-year period spanning 2015 to 2019.

That move has since come under scrutiny and in a statement ASIC today alleges that both Mitchell and Healy withheld material information from the Tennis Australia board when it made its decision to award the domestic broadcast rights.

The duo are also said to have failed to ensure that the board was fully informed about the value of the rights, the interest of parties other than Seven in acquiring those rights and the best method of marketing them.

Mitchell and Healy are alleged to have failed to advise the board that Tennis Australia was likely to obtain better terms by putting the rights out to competitive tender, as well as failing to ensure that a sub-committee, that had been appointed by the board to advise it about the granting of the rights, carried out its functions.

Healy served as president of Tennis Australia from October 2010 to April 2017, when he also resigned as a director of the organisation. Today’s news comes after Mitchell retired from the Tennis Australia board on October 29. He served as the body’s vice-president from December 2015 until his retirement.

In relation to Mitchell alone, ASIC also alleges that he passed on to Seven confidential information about the interest of its competitors in acquiring the rights, as well as the views and negotiating position of Tennis Australia’s management and board about the granting of the rights.

He is also said to have downplayed to the Tennis Australia board the interests of parties other than Seven in acquiring the rights and failed to inform the board about the concerns that Seven had over the interest of rival commercial broadcaster Ten in acquiring the rights. Mitchell is said to have encouraged the Tennis Australia board to conclude an agreement with Seven instead of putting the rights out to competitive tender.

ASIC is seeking that financial penalties be ordered against Mitchell and Healy and that both be disqualified from managing corporations.

In June, Nine reached an agreement to commence its coverage of the Australian Open a year early, with the deal coming a week after it said it had exited talks with the rights-holder, Seven. Nine’s deal with Seven and Tennis Australia means its contract will now start in January 2019 and run for six years, until the end of 2024.

Nine initially snatched the domestic rights to the Australian Open from Seven in a five-year deal signed in March.