Copyright Tribunal of Australia

Reference by APRA AMCOS (Stan Summons) [2023] ACopyT 2

COMMONWEALTH OF AUSTRALIA

COPYRIGHT ACT 1968

THE TRIBUNAL ORDERS THAT:

1.    Summonses in the form of the amended proposed summonses provided to the Tribunal on 7 June 2023 issue to The Walt Disney Company (Australia) Pty Ltd, Netflix, Inc. and Network Ten All Access Pty Ltd, returnable on 3 August 2023 at 4.00 pm.

REASONS FOR DETERMINATION

PERRAM J (PRESIDENT):

1    These reasons deal briefly with the proposed issue of summonses to a number of entities.

The summons to Disney

2    Stan seeks the issue of a summons to The Walt Disney Company (Australia) Pty Ltd (‘Disney’) in the form of an amended proposed summons provided to the Tribunal. The summons seeks the production of 11 categories of documents. In its submissions, Disney did not object to categories 7, 8, 9 or 11. In its submissions, Stan did not press category 4. The categories in dispute are therefore 1-3, 5-6 and 10.

Categories 1-3

3    These are as follows:

1.    Financial statements (in an audited form if available), including income statements and balance sheets, for each financial year of the Period for the entity (or group of entities):

(a)    that provide the Service in Australia; and or

(b)    incur the costs for the Service in Australia.

2.    Any periodic financial results for the Service in Australia (including those relating to revenue, subscriber numbers and costs) during the Period in the form reported to management.

3.    To the extent not included in the documents produced in answer to categories 1 and 2, any document recording the quantum and or basis for any inter-company charge payable by the Company to a related body corporate in relation to the Service in Australia.

4    Stan submits that these categories are relevant to its case that it is in a different financial position to the other Respondents who are international subscription video on demand (‘SVOD’) providers, including because it is unable to cross-subsidise its costs over other business units. The parties have already agreed that one of the issues to be resolved in the reference – Issue 16 – is this question:

What are the differences between Stan and other SVODs and is it reasonable for Stan to be licensed under a different scheme or fee having regard to those differences?

5    Disney submits that Stan has proffered no evidence for its position. Since its evidence is not yet on this is an underwhelming submission. I do not accept that the categories sought are not relevant to an issue before the Tribunal and I would decline to determine Issue 16 in Disney’s favour and find, as it invites me to, that Stan’s contentions about Issue 16 cannot succeed. Nor am I persuaded that the fact that Disney makes some of the information sought publicly available provides any reason to set aside the categories. Categories 1-3 will therefore stand.

Category 5

6    Category 5 is in these terms:

5.    Any documents authored or created by, for, or on behalf of, board members, senior management or executives containing budgets or forecasts regarding the revenue, subscribers or costs of the Service in Australia for the current and future financial years.

7    Disney’s relevance objection is rejected since the material is plainly relevant to Issue 16. Concerns about confidentiality are sufficiently addressed by the confidentiality regimes which exist in the proceeding. Disney says that the words ‘budgets or forecasts … for the current and future financial years’ could pick up budgets or forecasts which may be outdated. That may provide a reason to oppose their tender or for an expert to reflect negatively on their forensic value. It has no place in a debate such as the present. Category 5 will stand.

Category 6

8    Category 6 is in these terms:

6.    For the Period, any document(s) recording the annual amounts paid by the Company (or a related entity) for content for the Service in Australia, where the amount shall be calculated to the extent applicable, in accordance with the definition of Content Costs in the Stan Proposed Licence.

9    Again, this is relevant to Issue 16. The relevance objection is rejected. Disney’s additional complaint that the original category was not limited to the Service ‘in Australia’ falls away in light of Stan’s amended proposed summons, which adds these words.

10    I am also not persuaded that this category is crippled by a lack of clarity.

Category 10

11    This category is in these terms:

10.    For the last two quarters (and to the extent not produced under category 9), any document recording:

(a)    the total gross subscription revenue for the Service in Australia as reported to APRA AMCOS;

(b)    the total licence fee payable by the Company to APRA AMCOS; and

(c)    the total reduction to that licence fee as a result of the application of the formula in Schedule 3 of the Netflix Proposed Licence.

12    Disney’s original objections to category 10 have been accommodated by changes made by Stan which are reflected in the current form of category 10. Consequently, none remain and the category will stand.

13    A summons will issue to Disney in the form of the proposed amended summons.

The summons to Netflix

14    Stan seeks the issue to Netflix, Inc. (‘Netflix’) of a summons in the form of an amended proposed summons provided to the Tribunal. The summons also seeks the production of 11 categories of documents. No objection is taken to categories 8-11. Stan does not press categories 4 and 7. The categories in dispute are therefore categories 1-3, 5 and 6.

Categories 1-3, 5 and 6

15    These categories are as follows:

1.    Financial statements (in an audited form if available), including income statements and balance sheets, for each financial year of the Period for the entity (or group of entities):

(a)    that provide the Service in Australia; and or

(b)    incur the costs for the Service in Australia.

2.    Any periodic financial results for the Service in Australia (including those relating to revenue, subscriber numbers and costs) during the Period in the form reported to management.

3.    To the extent not included in the documents produced in answer to categories 1 and 2, any document recording the quantum and or basis for any inter-company charge payable by the Company to a related body corporate in relation to the Service in Australia.

…

5.    Any documents authored or created by, for, or on behalf of, board members, senior management or executives containing budgets or forecasts regarding the revenue, subscribers or costs of the Service in Australia for the current and future financial years.

6.    For the Period, any document(s) recording the annual amounts paid by the Company (or a related entity) for content for the Service in Australia, where the amount shall be calculated to the extent applicable, in accordance with the definition of Content Costs in the Stan Proposed Licence.

16    Netflix contends that documents produced under these categories are not relevant to any issue in the proceeding. However, as I have explained above in relation to Disney’s relevance objection to similar paragraphs of the summons addressed to it, they are relevant to Issue 16. I reach the same conclusion here. Confidentiality concerns in relation to category 5 can be managed by the regimes currently in place, as I have explained. Complaints as to burden have also not been made out. The categories will stand.

17    A summons will issue to Netflix in the form of the proposed amended summons.

The summons to Network Ten All Access

18    The summons seeks the production of 11 categories of documents. Category 4 is not pressed. Network Ten All Access Pty Ltd (Network Ten All Access) adopted Disney’s submissions. It did not identify the actual categories challenged but I infer the challenge is to categories 1-3, 5-6 and 10. Having rejected Disney’s submissions objecting to categories 1-3, 5 and 6, I also reject Network Ten All Access’s position on these categories. I would allow these categories in relation to Network Ten All Access.

19    Category 10 stands in a different position. Whilst Disney objected to category 10 in Stan’s initial proposed summons to it, this was resolved, in its case, by an amended form of the summons to which no objection was taken. However, there was no corresponding amendment to Network Ten All Access’s summons. Thus a live dispute about category 10 lives on for Network Ten All Access. The debate consists of Network Ten All Access adopting a submission which Disney does not make to a category Network Ten All Access does not identify. I propose to treat whatever this is as a relevance objection which I will reject on the basis of Issue 16.

20    In addition to adopting Disney’s submissions, Network Ten All Access made its own submission about the definition of ‘Service’: [3]. Here the point was that by using that definition the summons would seek irrelevant material. The categories which would seek irrelevant material were not identified but I will proceed on the basis that it is all of them. The relevance argument, as best I was able to discern it from [3], was that the former Ten All Access service (in effect the predecessor to the Paramount+ service) was charged on a sui generis basis compared to other SVODs. It followed that it could be of limited relevance to the issues in the reference. It is far too early to be making determinations of this kind. The fact that it was in a sui generis position makes it relevant to Issue 16.

21    Network Ten All Access also submitted that its associated entities’ business activities were varied and wide ranging. I do not see how this makes the documents sought less relevant to Issue 16.

22    A summons will issue to Network Ten All Access in the form of the proposed amended summons.

Associate:

Dated:    5 July 2023