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«COMMERCIAL RADIO INQUIRY Report of the Australian Broadcasting Authority Hearing into Radio 2UE Sydney Pty Limited February 2000 Sydney ISBN 0 642 ...»

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♦ reading live radio commercials; and making pre-recorded radio commercials.423 ♦ Mr Jones was also required not to promote products that competed with those of Optus, although the agreement was stated not to oblige Mr Jones to breach any of his obligations to 2UE.424 Negotiation Of The 1995 Agreement Between April and June of 1995 Mr Jones’ agent and manager, Mr Harry Miller, engaged in negotiations with Mr James Packer of Publishing and Broadcasting Limited (PBL) concerning a contractual arrangement between PBL, Optus, Optus Vision and Mr Jones.425 Key components of the relationship were to include product endorsement to generate sales, the influence of opinion ‘to counter Murdoch-dominated print media’ and the keeping of business from Telecom and Foxtel.426 The 1995 Agreement On 29 August 1995 Optus entered into a new agreement with Belford Productions and Mr Jones for a period of three years, commencing 1 June 1995.427 There was an annual fee CWO.0003.0541 Clauses 4 and 5 – CWO.0003.0541 Clause 2.1 – CWO.0003.0541 Clauses 9.2, 9.3 – CWO.0003.0541 Transcript, Mr Alan Jones p.1101; AJ.0008.1313; AJ.0008.1316; AJ.0008.1319; AJ.0008.1322 CWO.0004.0706 AJ.0006.1026 of $500,000 (plus CPI increases) and an additional fee of $20.00 for each new customer obtained by Optus through promotions involving Mr Jones.428

Mr Jones’ obligations included:

♦ the promotion of Optus Vision, Optus, PBL and their respective services and products by personal recommendation and endorsement;

♦ reading and embellishing radio commercials and press releases from advertising scripts and releases; and the making of pre-recorded radio commercials. 429 ♦ The Agreement provided that endorsement by Mr Jones was to be primarily directed to promote Optus Vision Services and to distinguish between Optus Vision and its competitors (in particular Telstra, Foxtel and Australis).430 In the event that the Optus Group was criticised in the media for ‘mistakes or errors in judgement’, Mr Jones was not required to ‘cover for Optus Vision, Optus or PBL’ where this might ‘prejudice his integrity as an experienced and respected radio commentator’.

Mr Jones was however, expected to use ‘his best endeavours to assist the Optus Group in remedying public attitudes arising from any such event’.431 Mr Jones agreed not to endorse any ‘Competitor’ or any ‘Competitive Service’,432 subject to the proviso that nothing in the agreement was to require him to provide services which would detract from his standing and integrity as a professional broadcaster and media personality or require him to limit or breach his obligations to 2UE.433 Optus reserved the right to terminate the agreement if Mr Jones ceased to host his program on 2UE.434 Events Subsequent To The 1995 Agreement On 26 June 1998, Ms Alexandra Lutyens, Sponsorship Manager, Optus sent a memorandum

to Mr Max Suich, Marketing Director, Optus. The memorandum states that:

What is unclear is whether AJ sees his role as one which promotes and delivers a pro-Optus stance on major issues (ie local call resale) … or whether he is prepared to ‘stretch’ our advertising dollar by editorialising.

Clauses 4 and 5 – AJ.0006.1026 Clause 2.1 – AJ.0006.1026 Clause 2.1(j) – AJ.0006.1026 Clause 6.2 – AJ.0006.1026 Clause 1.1 of the Agreement AJ.0006.1026 defines a Competitive Service as ‘each of telephony, subscription broadcasting and free to air broadcasting services other than those conducted by Optus Vision, Optus or PBL.’ Clause 1.1 of the Agreement AJ.0006.1026 defines a Competitor as ‘Telstra Corporation Limited, Foxtel Management Pty Limited, News Corporation Limited; Vodafone Pty Limited, Australis Media Limited or any Related Body Corporate of any of them, all free to air broadcasters other than the Nine Network and any other party who conducts a Competitive Service.’ Clauses 9.1, 10.1 – AJ.0006.1026 Clause 12.2(d) – AJ.0006.1026 To make the sponsorship pay ($10k a week), we need both to apply, and we should be getting at least 2-3 mentions of one type or another a week.435 Between 31 August and 3 September 1998 Mr Jones presented five live reads promoting Telstra Phoneaway cards.436 On 2 September 1998, Optus sent a facsimile to Mr Harry Miller reminding him of Mr Jones’ contractual obligations and suggesting that the Telstra promotions were in breach of them.437 A facsimile by Mr Harry Miller to Mr Jones indicated that Mr Harry Miller had told Mr Suich that this was ‘a mistake at 2UE’ and that ‘firm steps were being taken to make sure that it didn’t happen again’.438

Negotiation of the 1998 Agreement

On 29 May 1998 Mr Suich sent a facsimile to Mr Harry Miller outlining the ‘key points’ outstanding in the negotiation of a new contract.439 These included extended services including ‘advertorial endorsements for the press’, ‘advertising/advertorial assistance if there’s a float’ and ‘revised language on advocacy’.

The 1998 Agreement On 18 September 1998, Optus entered into an agreement with Belford Productions and Mr Jones for a period commencing on 1 June 1998 and ending on 31 December 2001.440 The fee was $500,000 per annum (plus CPI increases).441

Mr Jones’ obligations included:

♦ regular personal endorsement of Optus services and products;

♦ personal endorsement of the ‘public policy aspects’ of competitive Optus services such as Optus cable and satellite services;





♦ reading and enhancing radio commercials through personal endorsement from advertising scripts;

♦ reading, publicising and endorsing Optus policy statements about its competitive commitment;

♦ recording radio and television commercials;

♦ ‘the endorsement and participation in press advertisements and advertorial’ advising consumers of the quality and desirability of Optus Services’;

♦ the provision of his marketing skills and creative ideas in developing advertisements;

and ♦ if required by Optus, starring on an Optus Vision channel in an ‘Alan Jones Live’ programme on a five nights per week basis.442 CWO.0004.0762 CWO.0001.0193; CWO.0001.0189; AJ.0003.0457 CWO.0004.0802 AJ.0003.0464 CWO.0004.0719 ; Transcript, Mr Suich p 420 CWO.0003.0578 Clause 4 – CWO.0003.0578 Clause 2.3 – CWO.0003.0578 The Agreement provided that Mr Jones’ endorsement was to be primarily directed to promote Optus Services and to distinguish between Optus and competitors (in particular Telstra, Vodafone, AAPT, Foxtel and Australis).443 Mr Jones’ obligations in the event that the Optus Group was criticised in the media for ‘mistakes or errors in judgement’ were identical to those in the 1995 Agreement.444 The Agreement also provided that nothing in the agreement was to require Mr Jones to provide services which would detract from his standing and integrity as a professional broadcaster and media personality or require him to limit or breach his obligations to 2UE.445

Subject to this proviso, Mr Jones was:

♦ not to ‘publicly or privately disparage the Optus Group or Optus Services;

♦ make any statements which may adversely affect their image;

♦ ‘refer to any of them (directly or indirectly) adversely or in connection with any advertising of a Competitor or Competitive Service’; or to endorse any Optus competitors or competitor services.446 ♦ On 24 March 1999, Mr Stephen Woodhill, National Media Manager of Optus, sent a fax to Mr James Thane of Harry M Miller & Company Management, providing ‘an overview of the way we [Optus] see the relationship’.447 Although not part of the written contract, Optus desired that Mr Jones would ‘continue regular mentions of CWO on air’ and would ‘take scripts/speaking notes up to three times each week from CWO on issues of concern to the company and use them on the program’.448 The provision of favourable on-air comment and the undertaking not to disparage Optus were ‘important’ aspects of the agreement from Optus’ point of view.449 Optus reserved the right to terminate the agreement if Mr Jones ceased to host his program on 2UE.450 Attitude of Optus Administration Pty Limited to the Performance of the Agreement Mr Suich gave evidence that the significance to Optus of Mr Jones’ agreement could be

ranked in the following order:

Clause 2.3.

12 – CWO.0003.0578 Clause 5.2 – CWO.0003.0578 Clause 9.1 – CWO.0003.0578 Clause 8 – CWO.0003.0578 Clause 1.1 of the Agreement CWO.

0003.0578 defines a Competitive Service as ‘each of telecommunications, subscription broadcasting, free to air television broadcasting and internet services other than those conducted by the Optus Group’.

Clause 1.1 of the Agreement CWO.

0003.0578 defines a Competitor as ‘Telstra Corporation Limited, Foxtel Management Pty Limited, News Corporation Limited, Vodafone Pty Limited, Australis Media Limited or a Related Body Corporate of any of them, all free to air broadcasters other than the Nine Network and any other party who conducts a Competitive Service’.

AJ.0006.1149 AJ.0006.1150 Transcript, Mr Suich p. 424; Exhibit 24 p.3.

Clause 11.2(d) – CWO.

0003.0578 ♦ the provision of live reads;

♦ ‘public endorsement on the program and elsewhere’;

♦ ‘the use of him in pay television’; and ‘his appearances with customers and staff’.451 ♦ Mr Suich added, however, that ‘I don’t think you can underrate the importance of the live reads’.452 The agreement was current at the time of the hearing.

QANTAS AIRWAYS LIMITED (QANTAS)

Negotiation Of The Agreement In early May 1997 there were discussions between Mr Shirley, General Manager Public Affairs, Qantas and Mr Harry Miller concerning the possibility of establishing a relationship between Qantas and Mr Jones.453 A draft agreement was negotiated by the end of May 1997.454 Regarding some changes to the written agreement made by Mr Harry Miller, Mr Shirley noted ‘I have no problem with any of these, given that the agreement relies largely on trust’.455 The Agreement A letter dated 3 June 1997 from Qantas to Mr Harry Miller, countersigned by on behalf of Belford Productions Pty Limited by Mr Jones formed the final agreement.456 The agreement took effect from 1 July 1997 and continued for two years. Qantas was to pay Belford Productions $100,000 per annum together with $50,000 worth of Qantas operated flights, two first class firm Sydney-London-Sydney Qantas tickets per annum and a membership of the Chairman’s Lounge for Mr Jones.457 Mr Jones’ obligations included regular on-air editorial comment on news items and topics proposed by Qantas and the extension of invitations to Qantas Senior Executives to discuss on-air current and future developments at Qantas, both of which where considered appropriate by Mr Jones. Qantas was to provide Mr Jones with regular information on their developments in order to help him fulfil these obligations.458 Transcript, Mr Suich, p. 424.

Transcript, Mr Suich, p. 424.

QAN.0004.0695 AJ.0008.1387; QAN.0005.0706 QAN.0005.0709 QAN.0004.0697 QAN.0004.0697 QAN.0004.0697 These elements of the agreement were important to Qantas,459 although Mr Jones gave evidence that the other services provided for in the agreement represented a significant dollar value.460 The Agreement was performed, at least in so far as it involved on-air comment and interviews, to the satisfaction of Qantas.461 Attitude of QANTAS Airways Limited to the Performance of the Agreement Mr Shirley gave evidence that one of the reasons Qantas sought an agreement with Mr Jones

was because:

in my view a multifaceted agreement gives you much more comfort, if you like, and a better line of communication, hopefully a two-way communication, incidentally.462 Mr Shirley also gave evidence that one of the most significant parts of the agreement with Mr Jones was the provision of regular on-air editorial comment regarding Qantas.463 While the agreement was being negotiated, the addition of words ‘where appropriate (in the opinion of Mr Jones)’.464 Mr Shirley also gave evidence that the addition of these words in relation to the provision of regular editorial comment did not concern him as the agreement was

largely based upon trust:

I think it is fair to say that what I meant by that was that Mr Jones would have to rely and/or trust my judgment on what I provided him as being legitimate, and I would have to rely on the fact that he would take that into account when he was making a decision about when and if and how he would use that material.465 Mr Shirley gave evidence that he was satisfied with the performance of Mr Jones in relation to the provision where appropriate (in the opinion of Mr Jones) of regular on-air editorial comment.466 The agreement was current at the time of the hearing.

STATE BANK OF NSW (STATE BANK)

Negotiation Of The 1996 Agreement In May and June of 1996 there were several discussions between executives at the State Bank, Mr Jones and Mr Harry Miller concerning an agreement between Mr Jones and the State Bank.467 Transcript, Mr Shirley, p. 373.

Transcript, Mr Alan Jones, p. 1020.

Transcript, Mr Shirley, pp. 374, 377.

Transcript, Mr Shirley, p. 372.

Transcript, Mr Shirley, p. 373.

QAN.0005.0706; QAN.0005.0709 Transcript, Mr Shirley, p. 374.

Transcript, Mr Shirley, p. 374.

AJ.0001.0149; CSB.0003.0549; CSB.0004.0576 In an e-mail to Ms Lorna Davis, head of marketing at the State Bank, Ms Margot McKay, an

Executive at State Bank, was concerned that if Mr Jones:

is to be used as a ‘mouthpiece’ for State Bank … it may be inappropriate to also have him undertake some of the more ‘public’ elements proposed in the arrangements … I think we could run the risk, if we give Alan Jones too much exposure internally, of him being seen as a hired gun rather than as an objective commentator who can, when we need him to, also put the Bank’s position forward.468 In a fax to Mr Harry Miller on 12 June 1996 and copied to Mr Jones, Ms Davis pointed out

that:



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