«COMMERCIAL RADIO INQUIRY Report of the Australian Broadcasting Authority Hearing into Radio 2UE Sydney Pty Limited February 2000 Sydney ISBN 0 642 ...»
♦ the provision from time to time of positive editorial comment; and the recording of radio commercials.562 ♦ In addition Mr Laws was required to abstain from publicly or privately disparaging the Foxtel television service and from doing anything which would in any way adversely affect Transcript, Mr Edmonds, p. 170.
Transcript, Mr Edmonds, p. 178.
FOX.0001.0041 FOX.0001.0041 JL.0001.0171, a draft of the agreement is at FOR.0001.0003.
Clauses 4, 5 – JL.0001.0171 Clause 2.1 – JL.
0001.0171 Foxtel’s image, injure its reputation, or bring it into disrepute or ridicule during the term of the agreement.563 Mr Mockridge agreed in evidence that the main value of the Agreement to Foxtel was in the ‘ad lib’ and editorial comments provided by Mr Laws.564 Termination of the Agreement Some time prior to 13 August 1999 Mr Boyce of Hunt & Hunt, Solicitors (who acted for Mr Laws) called Ms Guthrie of Foxtel, asking that Foxtel agree to amend the Agreement so as to ‘delete the reference to John Laws embellishing radio commercials’ and to ‘delete the provision under which John Laws undertakes not to disparage the FOXTEL television service’.565 Correspondence ensued between Ms Guthrie and Mr Boyce in an attempt to negotiate a redrafted contract that would be suitable to both Mr Laws and Foxtel, but the attempt failed.566 The Agreement was terminated on 23 August 1999 by consent.567 The Panel finds that the negotiations for variation of the agreement suggest that the provision of regular on-air editorial was a valuable part of the relationship.
Attitude of Foxtel Management Pty Limited to the Performance of the Agreement When asked what Mr Mockridge valued in the relationship between Mr Laws and Foxtel, he
Firstly, certainly we were interested in ad-lib comment and support on air. Secondly, we were interested in developing a longer-term relationship that would lead to the on-air program [on Foxtel]. In Foxtel’s mind these things were complementary. Thirdly, at this time we were certainly aware that Alan Jones had a relationship with Optus, which in the past had been used very aggressively in support of Optus, so we were concerned that we should have something complementary with that.568 Later, Mr Mockridge also gave evidence that the syndication of ‘The John Laws Morning
Show’ was of value to Foxtel:
John Laws had a national reach as a radio broadcaster which is not available, to my knowledge, to any other broadcaster, particularly from Brisbane, Newcastle, the northern states and other states.569 Mr Mockridge also gave evidence that, while it was not the primary reason for entering into an agreement with Mr Laws, Foxtel wanted to protect itself against the possibility that Clause 7.1(f) – JL.0001.0171 Transcript, Mr Mockridge, pp.325and 348.
FOX.0003.0391 FOX.0003.0391; FOX.0003.0392; FOX.0003.0393; FOX.0003.0406 FOX.0003.0409 Transcript, Mr Mockridge, p. 330.
Transcript, Mr Mockridge, p. 335.
Mr Laws would enter into an arrangement with Optus Vision.570 Mr Mockridge agreed in evidence that, had Mr Laws entered into such an arrangement, the favourable comment from Mr Laws regarding Foxtel was likely to be minimal.571 NRMA LIMITED (NRMA) Negotiation of the Agreement Initial Discussions On 3 April 1997 Mr Laws’ agent, Mr Fordham, wrote to Mr Mark Payne, Group Marketing Manager of the NRMA, advising him of the types of services that Mr Laws could offer the NRMA. Mr Fordham and Mr Payne met on 8 April 1997. On 3 May 1997 Mr Fordham wrote to Mr Laws indicating that the NRMA Board had given approval to proceed with an endorsement agreement focusing on motoring services and insurance.572 However difficulties arose, and on 30 June 1997 Mr Fordham wrote to the Chairman of NRMA noting that Mr Laws would have problems endorsing some NRMA products for reasons of ‘editorial independence’ and that, apparently for that reason, NRMA had decided not to proceed with the endorsement agreement.573 Resumed Discussions On 15 February 1998 Mr Fordham wrote to the NRMA advising that Mr Laws would be interested in re-establishing a relationship with NRMA. A meeting took place on 2 March 1998.574 On 13 March, Mr Gary Williams, Advertising Manager (NSW) of the NRMA, wrote to Mr Fordham outlining NRMA’s proposal for Mr Laws.575 Mr Williams’ letter indicated that NRMA would respect Mr Laws’ right to editorial independence, but that the provision of positive editorial comment was regarded as an important aspect of the proposed arrangement,576 and that it was also expected that Mr Laws would not take public positions disadvantageous to NRMA’s public policy or business objectives.
The reaching of a final agreement was delayed by a series of negotiations between 2UE and Mr Laws and their respective lawyers concerning the extent to which the contract compromised Mr Laws’ editorial independence and required him to disguise paid promotional material as news or comment.577 Transcript, Mr Mockridge, p. 350.
Transcript, Mr Mockridge, p. 351.
JL.0002.0430 JL.0002.0436; Note that there is a handwritten note at the bottom of the letter that says to John Laws FYI, John F.
Transcript, Mr Williams p.460, Transcript, Mr Fordham, p 648.
JL.0002.0441 Transcript, Mr Williams, pp.465, 468, 517-518.
NRMA.0001.0044; NRMA.0001.0045; 2UE.0015.2768; 2UE.0015.2769; 2UE.0015.2783;
On 26 May 1998, Hunt and Hunt wrote to NRMA attaching a draft agreement that was approved by both Mr Laws and 2UE. Several deletions and additions were noted.578 Regarding the rewording of the agreement, an internal NRMA memorandum by Mr Lever,
Corporate Communications Manager of the NRMA, noted that:
the provisions on positive editorial comment are less specific than in earlier drafts…However I have been advised by Laws’ agent, John Fordham, and his solicitor Garry Boyce, that in practice the new wording will impose no additional constraints on Laws in fulfilling the intent of the agreement …579 Messrs Williams and Fordham also recalled understanding that the agreement between Mr Laws and NRMA would operate as originally intended despite the changed wording.580 The Agreement On 12 June 1998 NRMA into an agreement with Linkex Pty Limited (a company associated with Mr Laws) and Mr Laws for a term of 3 years commencing on 1 July 1998.581 In exchange for an annual fee of $300,000 Linkex Pty Limited agreed to provide certain services of Mr Laws.582
Those services included:
♦ promoting the image, products and services of the NRMA;
♦ reinforcing and strengthening positive public perceptions of the NRMA; and extending the perception of the NRMA brand beyond motoring and insurance.583 ♦ They were to be performed through recorded and live read radio commercials. It was noted that the radio commercials might include the personal endorsement of Mr Laws, subject to the proviso that the text of all commercials was to be submitted to Mr Laws for approval and NRMA was obliged not to unreasonably decline to make suggested amendments.584 Notwithstanding the written terms of the Agreement, it appears to have been understood between the parties that Mr Laws would occasionally make comments favourable to NRMA on his program.585 The precise terms of the agreement were required to be kept confidential.586 Attitude of the NRMA Limited to the Performance of the Agreement Mr Williams gave evidence that the NRMA was ‘enormously satisfied’ with the arrangements between the NRMA and Mr Laws.587 Mr Williams also gave evidence that the JL.0002.0443.
NRMA.0001.0088 Transcript, Mr Williams p.474; Transcript, Mr Fordham, p 657.
Clause 4 – JL.0001.0212 Clause 2.1 – JL.
0001.0212 Clauses 2.2, 2.3, 2.4 – JL.0001.0212 See ‘Resumed Discussions‘.
Transcript, Mr Williams, pp. 513-514 Transcript, Mr Williams, p. 497.
NRMA sought the positive editorial comment of Mr Laws when it entered into the agreement.588
OPTUS ADMINISTRATION PTY LIMITED (OPTUS)The 1992 Agreement There was a ‘John Laws Endorsement Agreement’ with Optus in operation as at 8 April 1992. Ratification by Optus’ Board was considered necessary because it was possible that payments would exceed $250,000.589 The 1993 Agreement On 8 April 1993 Optus entered into an agreement with Smith Smyth & Jones Pty Limited and Mr Laws for a period of twelve months, with an additional twelve month option exercisable by Optus.590 There was an annual fee of $100,000 plus a performance-based fee based on increases in Optus’ market share.591 Mr Laws was required to promote and enhance Optus and its products through his personal recommendation and endorsement, including by reading live radio commercials from scripts provided by Optus and appearing in and recording radio commercials for broadcast on 2UE.
He was also required not to promote certain products that Optus regarded as competing with their own, primarily long distance communication systems.592
The 1995 Agreement
On 21 April 1995 Optus entered into a new agreement with Smith Smyth & Jones Pty Limited and Mr Laws for a period of four years, commencing on 15 May 1995.593 There was a fee of $825,000 per annum (plus CPI increases in years 2-4) and an additional performance based fee that was based on the number of subscribers switching to Optus services.594 Mr Laws was required to promote Optus Long Distance and Optus Mobile (and particularly to distinguish between these services and those provided by Telecom) through services including regular personal endorsement on his program, reading and embellishing radio commercials and press releases, appearing in and recording radio commercials for broadcast on 2UE and providing marketing skills and creative ideas in developing advertisements.595 Mr Laws agreed not to promote Long Distance and Mobile Telephones for any party other than Optus.596 Transcript, Mr Williams, pp. 517-519.
Clause 4 – CWO.0003.0592 Clauses 2.1 and 9.3 – CWO.0003.0592 JL.0006.1233; CWO.0003.0604.
Clauses 4 and 5 – JL.0006.1233; CWO.0003.0604 Clause 2.1 – JL.
0006.1233; CWO.0003.0604 Clause 9.1 – JL.0006.1233; CWO.0003.0604 In the event that Optus was criticised in the media for ‘mistakes or errors in judgement’, Mr Laws was not required to ‘cover for Optus’ where this might ‘prejudice his integrity as an experienced and respected radio commentator’. Mr Laws was however, expected to use ‘his best endeavours to assist Optus in remedying public attitudes arising from any such event’.597 These provisions are identical to those contained in the agreement between Mr Jones and Optus (see ‘The 1995 Agreement‘ on page 126).
On 27 June 1995 Mr Mansfield, Chief Executive Officer of Optus wrote to Mr James Packer General Manager of Publishing and Broadcasting Limited and Mr Cousins, Chief Executive Officer of Optus Vision. The letter disclosed Optus’ underlying understanding that the money paid to Mr Laws under the contract was divided between the promotion of Optus, Optus Vision and Publishing and Broadcasting Limited, with key elements of the agreement including product endorsements to generate sales; to ‘influence opinion – to counter Murdoch dominated print media’ and to ‘keep from Telecom and Foxtel’.598
Events Subsequent to the 1995 Agreement
Up until June 1997, it appears that Optus was generally happy with its agreement with Mr Laws. After Mr Laws signed an endorsement agreement with Foxtel, however, there was mounting dissatisfaction, as Foxtel was a direct competitor to Optus Vision. The April 1995 Agreement has not been renewed.
Attitude of Optus Administration Pty Limited to the Performance of theAgreement
Mr Suich gave evidence that the value to Optus of its relationship with Mr Laws was where Mr Laws gave positive editorial comment.599 Mr Suich gave evidence that it was due to Mr Laws’ lack of support in regard to Optus Vision which ultimately disappointed Optus.600 Mr Suich gave the evidence that, although Optus may send through material to Mr Laws for his use on air, Mr Laws did not always choose to use that material. Mr Suich gave evidence that Mr Laws would provide support to Optus generally, rather than through the material sent
by Optus.601 However, Mr Suich said that:
if you are getting what the contract sought, which was public endorsement and support, even if it’s not coming out of your material, I don’t know that you re-think the contract. But if you got neither, I would think that, as we did with Optus Vision, we’d certainly be uncomfortable about it, or disappointed about it.602 Clause 6.2 – JL.0006.1233; CWO.0003.0604 CWO.0004.0706 Transcript, Mr Suich, p. 438.
Transcript, Mr Suich, p. 439.
Transcript, Mr Suich, p. 438.
Transcript, Mr Suich, pp. 438-439.