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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 ...»

-- [ Page 65 ] --

In other words, they’re not just hooking customers up to local phones. There are two or three revenue streams coming from the one customer.

Chris Anderson has had to endure a fairly sceptical market for a long time. He’s now more than dragged Cable and Wireless Optus around the corner. They are a viable entity and customers are increasingly going to be looking at shifting their business from Telstra to Cable and Wireless Optus.1116 Mr Jones’ Submission to the Hearing

Mr Jones made the following submission:

This is an express personal endorsement on the basis of facts which are undisputed.1117 The Panel’s Findings

The Panel finds that this matter is an advertisement because:

♦ it is calculated or designed to promote Optus by focusing attention on the half year financial results of Cable and Wireless Optus. Mr Jones praises Optus’ performance, ‘I Exhibit 86, p. 172.

Submission made by Mr Alan Jones, paragraph 249.

must say well done to Chris Anderson and the people down there. A good half-yearly result’; and ♦ valuable consideration was provided to Mr Jones by Cable and Wireless Optus Pty Limited.

The Panel finds that this advertisement has been presented as an ‘other program’ for the

following reasons:

♦ it has the characteristics and content of a current affairs program; and ♦ it purports to concern matters relating to social and economic issues of relevance to the community. Mr Jones is commenting on the perception in the financial marketplace that Optus may be a viable company in which to invest, which is a significant issue for any public company, including Optus The Panel finds that 2UE breached clause 3.1(a) of the Codes.

LOCAL CALLS Material Provided to Mr Jones

On 22 June 1999, Mr Woodhill, Optus, sent a fax to Mr Jones. The fax provided:

We put this release out today; it is a significant step in communication. While we have many more local call customers through reselling Telstra’s services, this 170,000 are on our cable.

It is proof that we are providing competition to Telstra – we are the only company competing in local telephony.

This announcement is significant in terms of what is going on in the world at present. Optus was the first company in the world to deploy this cable technology for local telephony. It has proven so successful other companies in the world are buying cable TV companies in the United States so they too can provide local telephony the way Optus does. One example of this is AT&T who bought Media One, a company we worked with to put our cable network in place.

It ties in nicely with the announcement we made about our joint venture with Excite@Home as all the technologies (telephony, Internet via cable modem, long distance, pay TV) can only converge using cable.1118 Attached to the fax was a media release, entitled ‘Cable & Wireless Optus delivers on local

telephony promise’, dated 22 June 1999. It provided:

Cable & Wireless Optus today delivered on its commitment to shareholders and institutional investors to install 170,000 directly connected local telephony customers prior to the end of the financial year (30 June 1999).

The commitment was made prior to the company’s listing on the Australian Stock Exchange in November of last year and has been reaffirmed on several occasions since.

‘This is another example of Cable & Wireless Optus delivering on promises – doing what we said we would do,’ a company spokesman said.

AJ.0001.0096 ‘By meeting our forecasts for directly connected local telephony customers, we are building real value in the broadband HFC network.

‘The recent announcement of a joint venture with the world’s leading aggregator of broadband content and service provision Excite@Home, as well as the launch of cable modems this year, will continue to build the value of this asset,’ the spokesman said.

The milestone was reached one week earlier than forecast, due mainly to installations reaching a high of 7,000 customers a week for the past three weeks. Having stress tested the network at this level, local telephony activations will be maintained at around 5,000 customer activations per week.1119 Material Broadcast by Mr Jones

On 23 June 1999, Mr Jones broadcast the following:

An interesting announcement by Cable and Wireless Optus yesterday. You’ll appreciate that I’ve said many times the biggest problem that Telstra imposed on us is the exorbitant cost of local telephone calls. We’re almost, if not the, dearest in the world. And breaking down the Telstra monopoly of the local telephone industry is damn difficult. My own view is that Telstra shouldn’t have been privatised until that monopoly was broken down.

But Cable and Wireless Optus have announced that they’ve installed 170,000 - that’s a lot directly connected local telephony customers prior to the end of this financial year. That’s something. When they listed on the Stock Exchange last year, they said they’d do that. In other words, Cable and Wireless Optus are connecting local telephone customers. It’s in the broadband HFC network, and they recently announced a joint venture with the world’s leading aggregator of broadband content and service provision, which is Excite at Home, which will provide through the same broadband a range of services right into your home.





But on local telephones - I mean, if you’re unhappy - Cable and Wireless Optus are connecting 7,000 a week, or they have over the past three weeks. And this is the competition that I’ve been talking about for a long time that must be secured in the market place to Telstra. And Cable and Wireless are the only company competing in local telephony.

Now, remember when Optus came into the long distance calls way back, and mobile calls, the prices dropped. This is the only way the consumer’s going to get some benefit out of local telephone call costs. So if you’re looking to support the notion of competition in telecommunications, start with the local phone call and think about Cable and Wireless Optus.1120 Mr Jones’ Submission to the Hearing

Mr Jones made the following submission:

Again, this is an announcement, expressly attributed to Optus: ‘Optus has said...’. It states facts, and there is no suggestion that the facts are inaccurate.1121 AJ.0001.0097 AJ.0001.0098_01; Exhibit 86, p. 183.

Submission made by Mr Alan Jones, paragraph 251.

The Panel’s Findings

The Panel finds that this matter is an advertisement because:

♦ it is calculated or designed to promote Optus and Optus’ local telephony service.

Mr Jones states, ‘This is the only way the consumer’s going to get some benefit out of local telephone call costs. So if you’re looking to support the notion of competition in telecommunications, start with the local phone call and think about Cable and Wireless Optus.1122 Mr Jones also promotes Optus by criticising their competitor, ‘And this is the competition that I’ve been talking about for a long time that must be secured in the market place to Telstra. And Cable and Wireless are the only company competing in local telephony … So if you’re looking to support the notion of competition in telecommunications, start with the local phone call and think about Cable and Wireless Optus’;1123and ♦ valuable consideration was provided to Mr Jones by Cable and Wireless Optus Pty Limited.

The Panel finds that this advertisement has been presented as an ‘other program’ for the

following reasons:

♦ it has the characteristics and content of a current affairs program; and ♦ it purports to concern matters relating to social and economic issues of relevance to the community. Reporting of attributed points of view is a feature of current affairs programs. Mr Jones comments on the issue of competition in telecommunications, and expresses his opinion about the privatisation of Telstra. Mr Jones says, ‘‘You’ll appreciate that I’ve said many times the biggest problem that Telstra imposed on us is the exorbitant cost of local telephone calls … And breaking down the Telstra monopoly of the local telephone industry is damn difficult. My own view is that Telstra shouldn’t have been privatised until that monopoly was broken down’;1124 The Panel finds that 2UE breached clause 3.1(a) of the Codes.

AJ.0001.0098_01; Exhibit 86, p. 183.

AJ.0001.0098_01; Exhibit 86, p. 183.

AJ.0001.0098_01; Exhibit 86, p. 183 Schedule 14: Conduct on the John Laws Morning Show Involving Breaches of Clause 3.1(a) of the Codes By Radio 2UE Sydney Pty Limited In each of the following instances an advertisement for a sponsor broadcast on Radio 2UE was presented by John Laws as a news program or other program.

NRMA Limited

WOLLONGONG INSURANCE CLAIMS

Material Broadcast by Mr Laws

On 30 October 1998 Mr Laws broadcast the following:

We’ve got to be fair to the NRMA. You’ve got to praise their generosity in paying claims by people affected by floods in New South Wales, in Wollongong. They really have taken a bit of beating, but there were plenty of other insurance companies involved, I mean we should have been climbing into everybody.

The NRMA could have refused some of those payments because legally, they weren’t liable.

And they weren’t liable. I mean legally that’s it. But the NRMA, smart organisation, well some smart people in it anyway. And certainly its smart enough and compassionate enough, to take a more human approach and pay the claims.

So, another 127 flood victims will receive what are known as ex-gratia payments, of a couple of million dollars. That takes the NRMA payout to about $25 million. Which is big isn’t it?

Now of course the pressure will come from the other flood victims.

Protesters will try and convince the GIO, I suppose, to meet its Wollongong claims as well and you can bet the other insurance companies will also be targeted. But I have to say, that the thing that bothers me about it was that the poor old NRMA being the first to do the right thing, seem to be the ones that got all the flak.

Another difficulty is what happens to victims of floods in New South Wales, in places like Bathurst and Nyngan, Narrabri, Coffs Harbour. I mean they’ll want compensation as well, even if their policies are invalid. So there’s going to be more problems down the road.

Two things come out of this mess. Insurance companies need to get a more realistic interpretation of what is storm water damage and what is flood damage and the people who are buying insurance policies, need to have a better understanding. I mean, perhaps they need to have some kind of educational process in place.

The other point is that residents do have to look out for themselves. They’ve got to check the policies and see exactly what is covered. This time flood victims will get some compensation, but it might not happen again, because it need not happen again because legally, NRMA didn’t have to do it. But they did it.

So, if you do live in an area that is susceptible to flooding, be very, very careful and the sensible thing to do, obviously, is simply to check the policy.1125 Mr Laws’ Submission to the Hearing

Mr Laws made the following submission regarding this broadcast:

His submission is that the material which is broadcast should be regarded by the Authority as having been broadcast for the primary purpose of informing, assisting and comforting his listeners about a matter of great concern, both to them and to the general community. Mr Laws accepts that some of his comments may have reflected favourably upon the response of the NRMA to those flood claims and this might have had the effect of promoting the image of the NRMA to his listeners. However, Mr Laws submits his comments were both truthful and represented his genuine opinion upon these matters reasonably based upon the information available to him.

… It is respectfully submitted that none of these broadcasts was an ‘advertisement’ within the meaning of this provision of the Code. Instead, it was, and was intended to be, a part of Mr Laws’ program in which he commented upon matters of public interest in order to inform and assist his listeners.

2UE’s Submission to the Hearing In addition to 2UE’s general submission, 2UE also made the following submissions

regarding this broadcast:

This broadcast is not an advertisement for the purposes of clause 3.1(a) because it did not arise out of any arrangement between the licensee and the third party.

The broadcast is not an advertisement merely because of the fact that it mentions a third party, even if the reference is favourable to that third party. It is an essential ingredient of an advertisement that it be broadcast at the request of a third party. For the Panel to find that a particular broadcast was an ‘advertisement’ the Panel must be satisfied that the proximate cause of the broadcast going to air was the request or wish of the third party. The evidence before the Panel does not permit it to make such a finding.

–  –  –

The Panel’s Finding The Panel does not accept Mr Laws’ submission that this broadcast is not an advertisement The Panel finds that a substantial purpose of the broadcast is to promote the NRMA in accordance with the agreement between Mr Laws and the NRMA. The submission that Mr Laws’ comments were ‘truthful and represented his genuine opinion’ is irrelevant in determining whether the broadcast is an advertisement.

The Panel does not accept 2UE’s submission that this broadcast is not an advertisement because it did not arise out of any arrangement between the licensee and a third party and because it was not made at the request of a third party (refer to section entitled Definition of an ‘advertisement’).

For the following reasons the Panel finds that this matter is an advertisement:

♦ it is calculated or designed to promote an organisation, the NRMA, by being mainly concerned with the NRMA’s record in compensation victims of flooding in Wollongong, by comparing positively the action taken by the NRMA in this regard with that of other insurance companies, and by making mention of the NRMA six times, each time favourably; and ♦ valuable consideration was provided to Mr Laws by the NRMA.



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