PCCW MEDIA LTD v. THE BROADCASTING AUTHORITY AND ANOTHER

HCAL 97/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 97 OF 2005

______________________

______________________

______________________

J U D G M E N T

______________________

I. Introduction

1.  PCCW and Galaxy are competitors in the domestic pay TV market.

2.  Both hold Domestic Pay TV Programme Service Licences issued under the Broadcasting Ordinance (Cap. 562) (BO).  Galaxy's licence entitles it to transmit TV programmes by satellite.  PCCW's licence entitles it to transmit TV programmes via a broadband fixed line network.

3.  In accordance with condition 32 of its licence, Galaxy applied to the Government to extend the scope of its licence to permit transmission of TV programmes through the broadband network of Hutchison Global Communications (HGC).  In support of its application, Galaxy provided various materials to the Authority.

4.  Concerned about Galaxy's application, PCCW wrote some 7 letters to the Authority between January and April 2005 requesting disclosure of the materials provided in support of that application.

5.  PCCW contends that the public in general and (as a competitor) PCCW in particular should have an opportunity to make representations to the Government on whether Galaxy's application should be granted.  PCCW maintains, however, that it cannot make meaningful representations unless it can study Galaxy's materials and obtain some clearer understanding of Galaxy's proposals.  PCCW says that it does not mind if materials are supplied to it with commercially sensitive details blacked out.

6.  By a letter dated 29 April 2005 to PCCW, the Authority replied that it would not disclose Galaxy's materials.  In a document (the Annex) attached to the letter, the Authority gave reasons for its decision.

7.  By these proceedings, PCCW seeks judicial review of the Authority's decision refusing disclosure of Galaxy's materials.  PCCW submits that in refusing disclosure the Authority erred in the following ways:

(1)	The Authority erred in its understanding of its power to disclose confidential material in the public interest under BO s.27(2)(d).
(2)	The Authority's decision refusing disclosure was irrational.
(3)	The Authority came to its decision by an unfair procedure.
(4)	The Authority ought to have (but wrongly did not) treat Galaxy's proposal as an application for a new licence or as an application to vary an existing licence.

8.  Although only communicated on 29 April 2005, the Authority arrived at its decision not to make disclosure at a meeting on 16 April 2005.  At the same meeting, after deciding that disclosure to PCCW was not warranted, the Authority approved Galaxy's application to transmit TV programmes over HGC's broadband network.  PCCW has appealed to the Chief Executive-in-Council against both the refusal to disclose Galaxy's materials and the granting of Galaxy's application.  PCCW has done this pursuant to BO s.34.  Both administrative appeals have been stayed pending the outcome of this judicial review.

II. Discussion

A. Issue 1: Whether error in relation to BO s.27

9.  BO s.27 provides as follows:

"	(1)	Subject to subsection (2):-
		(a)	any information which is furnished, and any data, book, document or record which is produced by a person in confidence to the Broadcast Authority or any person authorized by it or any committee appointed by it or by that committee, the Telecommunications Authority or any person authorized by him, shall be treated as confidential; and
		(b)	unless the person otherwise permits in writing and except in accordance with such permission, no such information, data, book, document or record or any copy thereof shall be divulged or shown to any person other than in confidence to members of the Broadcast Authority or any committee appointed thereby, or to a public officer acting in the performance of his duties or for the purposes of this Ordinance or the Broad Casting Authority Ordinance (Cap.391).
	(2)	Subsection (1) shall not be construed as prohibiting the disclosure of information:-
		(a)	with a view to the institution of or otherwise for the purposes of any criminal proceedings or any investigation in connection therewith, whether under this Ordinance or otherwise, in Hong Kong;
		(b)	in connection with civil proceedings to which the Broadcasting Authority is a party;
		(c)	which facilitates the Broadcasting Authority or the Telecommunications Authority investigating or determining a complaint that a licensee is engaging in conduct that contravenes a provision of a prescribed Ordinance; or
		(d)	subject to subsection (3), which the Broadcasting Authority considers it is in the public interest to disclose.
	(3)	The Broadcasting Authority shall give the person supplying the information in confidence a reasonable opportunity to make representations on a proposed disclosure of the information under subsection (2)(c) or (d) and shall consider all representations made before the Broadcasting Authority makes a final decision to disclose the information.
	(4)	A person may permit, subject to such conditions as the person may specify, the Broadcasting Authority, the Telecommunications Authority or any person authorized by the Broadcasting Authority or the Telecommunications Authority:-
		(a)	to divulge specified information which the person has given thereto; or
		(b)	to show any specified document or any copy thereof which the person has produced thereto,
		to any person or to any specified person.
	(5)	In this section, 'data, book, document or record' ... means the same as it does in section 25(10)."

10.  There is no doubt that Galaxy's materials were provided to the Authority in confidence.  The Authority inquired whether Galaxy was prepared to have the materials disclosed to PCCW.  Galaxy refused.

11.  In the Annex the Authority took the view that Galaxy's materials could only be divulged if justified in the public interest under BO s. 27(2)(d).  The Annex then explains the Authority's refusal to make disclosure as follows:

"	3.	In the present case, the BA [the Authority] considers that the question of 'public interest' to disclose confidential information furnished by licensees only comes into play where there is a new application for licence or where there is an application for a variation of an existing licence, as prescribed in the BO.
	4.	Having considered the status of Galaxy's application in the context of the entirety of Galaxy's licence, the BA considers that the present application only concerns change of transmission means.  The BA is of the view that it is a licence administration matter and the BA's determination will only affect the licensee and not the public.  As such, the BA takes the view that it is not necessary to consult other licensees or competitors.
	5.	...
	6.	The BA therefore considers that the confidential information submitted by Galaxy should be treated as such under section 27 of the BO."

12.  Mr. Beresford (appearing for PCCW) submits that the Authority's reasoning is wrong in law.  BO s. 27(2)(d) (Mr. Beresford say) is unqualified in its terms.  It does not only apply when a new licence is being sought or a licence is being varied in some material way.  The provision (Mr. Beresford suggest) covers any materials provided to the Authority in confidence.

13.  In my judgment, Mr. Beresford's construction of BO s. 27(2)(d) is correct.  The ambit of the section is unrestricted. But it does not follow from this that the reasoning in the Annex was invalid and the Authority's refusal to disclose must be quashed. 

14.  In my view, Mr. Beresford reads the Annex too narrowly and out of context.

15.  By its evidence filed in these proceedings, the Authority has pointed out that, following the publication in 1998 of a consultation paper entitled "The 1998 Review of Television Policy" and at least since the BO's enactment in 2000, the Government has pursued a more permissive, "technology neutral" broadcasting regime.  This means that the Government has focused on regulating the content of TV broadcasts as opposed to the "technology" or means by which that content is broadcast. 

16.  The Government's intent is to enable licensees to provide TV programmes through multiple modes of transmission.  The Government hopes that such policy will encourage the development of a variety of forms of TV coverage and distribution in Hong Kong.

17.  Given that policy, where a licensee applies to add to the modes by which his TV programmes are transmitted, the Authority might reasonably form the view that no significant variation of that licensee's existing broadcast license is being sought.  The whole point of the policy, after all, is to encourage licensees to explore various modes of transmitting their programmes.

18.  In those premises, the Authority might also reasonably form the view that, in general, it would usually only be when some person seeks to enter the market by applying for a broadcast licence, or when an existing licensee wants to vary the nature or content of his broadcasts, that a substantial public interest arises.  In those specific circumstances, the possibility of a significant change to the existing market may impose a duty on the Authority to consult the public (including competitors) on whether the proposed change sought should be allowed.

19.  I think that is all that the Authority meant by its Annex §3.  It did not mean to say that, as a matter of law, BO s. 27(2)(d) only concerns particular types of applications.  What it simply meant was that, given the operative policy, in practice it was hard to envisage the discretion in the public interest under BO s. 27(2)(d) being exercised in favour of disclosure except in particular types of application (of which Galaxy's proposal was not one).

20.  The contrast between a mere addition to the means of transmission already permitted to Galaxy and a more fundamental variation to Galaxy's license was plainly in the Authority's mind when it wrote the Annex.  This is apparent from 2 pieces of evidence. 

21.  First, there is the express reference in Annex §4 to Galaxy's application being essentially a matter of "licence administration" in the Authority’s view.

22.  Second, the Authority has itself more fully explained its position in the 2nd Affirmation of Pui-Leong Po filed in these proceedings.  In that Affirmation, Mr. Po (the Authority's Secretary) states:

"	44.	As such, it is submitted that so far as the first ground of review is concerned, the BA's comments in the Decision have been taken out of context and in isolation from the thorough analysis of relevant views and arguments that precede it, and that a proper analysis of the Decision and the BA's correspondence with the parties demonstrates that the BA has discharged in full its duty pursuant to Sections 27(2) and 27(3) of the BO to conduct a formal and proper analysis as to whether it was in the public interest to disclose information related to Galaxy's Application.
	45.	As I shall further explain below and as also set out in paragraph 4 of the [Annex], the BA, after full deliberation, came to the conclusion that Galaxy' Application did not amount to a new application for a licence nor was so fundamental as to amount to a variation of its existing licence.  It was an application to which the BA, under the terms of its existing licence (namely, Conditions 10 and 32) were entitled to process and approve as an administrative matter affecting essentially the licensee in the context of that case, and a matter which the Chief Executive in Council, when granting Galaxy its licence, saw fit to have authority delegated to the BA.
	46.	The BA did not identify grounds sufficient to justify disclosure of Galaxy's application on public interest concerns nor did PCCW Media sufficiently establish such public interest grounds as would persuade the BA to override the confidentiality obligations under Section 27 of the BO.
	47.	Following its assessment of the public interest factors, the BA has concluded that whilst Section 27 of the BO may allow the private interest of a party providing information to the BA in confidence to be subordinated to the public interest in appropriate circumstances, in this instance, having taken into account the views of Galaxy and PCCW Media, the BA was not satisfied that such 'appropriate circumstances' existed and therefore declined PCCW Media's request."

23.  Accordingly, on Mr. Po's evidence, the Authority did not simply dismiss PCCW's request for disclosure on the basis that BO s. 27(2)(d) was inapplicable in law.  The Authority instead considered PCCW's request on its merits and decided that in all the circumstances the public interest did not call for disclosure.

24.  It follows that PCCW fails on Issue 1.

B. Issue 2: Whether Authority's decision irrational

25.  Mr. Beresford's submissions on irrationality appear to be as follows:

(1)	Approval of Galaxy's application may lead to more competition between PCCW and Galaxy.  PCCW is part of the public.
(2)	There is the concern that Galaxy's application (if allowed) will entail a change in the investment milestones in Galaxy's licence.  This may affect competition among all licensees (including PCCW).
(3)	There is also the danger that Galaxy's application, if allowed, will lead to Television Broadcasts Ltd. (TVB) (a 49% shareholder in Galaxy) gaining dominance over the market and engaging in unfair competition.  This is especially a matter of concern to PCCW (Mr. Beresford submits) because there have been numerous complaints about TVB giving Galaxy preferential treatment in the past (when TVB held a 100% interest in Galaxy), contrary to firewall conditions in Galaxy's licence.
(4)	The matters in propositions (1), (2) and (3) must be in the public interest.
(5)	Further, by denying PCCW sight of Galaxy's materials, PCCW is prevented from commenting fully in the public interest on the matters set out in propositions (1), (2) and (3) (among others).
(6)	Accordingly, the Authority should have decided that Galaxy's materials should be disclosed in the public interest.  Instead, the Authority wrongly concluded that the public interest was not engaged and that Galaxy's application was simply a matter of licence administration.

26.  I am not persuaded by Mr. Beresford's argument.

27.  In relation to proposition (1), Galaxy's application (if approved) may lead to increased competition between PCCW and Galaxy.  That may or may not be detrimental to PCCW's interest.  But I do not think that the Authority is required to equate PCCW's interest with that of the public at large in considering whether or not to make disclosure under BO s.27(2)(d).  No doubt PCCW is a member of the public at large.  But that does not mean that PCCW's interests are equivalent to those of the public.

28.  Proposition (2) is highly speculative.

29.  As the Authority is at pains to stress, there has been no reduction in Galaxy's capital commitments under its licence.  The investment milestones which Galaxy is required to meet as a licensee remain the same as before.  The only change sought by Galaxy has been of an additional mode of transmission. 

30.  The newspapers and other media may speculate about changes to Galaxy's business plan in the future, but such remain pure guesses. 

31.  Mr. Beresford infers that there has been a change in the fundamental nature of Galaxy's licence from statements such as the following:

(1)	From a press release by HGC and Galaxy dated 27 January 2005:
	"Jackey Chan, Chief Operating Officer of Galaxy said in the ceremony, 'This cooperation marks a major milestone for HGC and Galaxy [in] both our future business development.  At present, Galaxy's network has already covered 600,000 homes in Hong Kong while HGC's has covered 1.3 million FTTB [fibre-to-the-building] homes.  Both companies will further expand their networks and Galaxy's total coverage will further substantially grow to 2 million homes towards the end of the year.  The introduction of the broadband delivery mode will directly benefit our future business development as it will greatly reduce our investment cost and time on network building."
(2)	From the Affirmation of Yuen Chiu Man (Galaxy's legal counsel) filed in these proceedings:
	" Galaxy's licence was issued in December 2000.  The upcoming milestones stipulated in the performance bond attached to its licence (p.65) require Galaxy to commit certain homes passed by the respective deadlines.  The BA has recently confirmed that Galaxy has passed the 1.2 million premises milestone.  The 1.2 million premises includes those using the HGC broadband network."

32.  I am unable to see how the press release or Mr. Yuen's affirmation assist Mr. Beresford's case.  The statements are a tenuous ground from which to deduce any intention on Galaxy's part to shy away from the contractually binding milestone events found in its licence.  The investment milestones remain as conditions. 

33.  Mr. Beresford suggests that the statements just quoted suggest that Galaxy will not be investing as much as it originally proposed to invest in the development of a satellite network.  Galaxy may or may not be minded so to conduct itself.  Galaxy may or may not be entitled so to act.  The evidence is far from compelling one way or the other.  But, even if Mr. Beresford is right, that would seem to be a mere consequence of the "technology neutral" environment being fostered by Government policy.  There is no suggestion in PCCW's Notice for judicial review that such policy is under challenge as irrational.

34.  There is simply no substantive basis for PCCW to contend that implicit in Galaxy's application are changes of such a radical nature that the proposal to transmit through HGC's network constitutes an application for a new licence.

35.  Nor is there any basis to suggest that Galaxy's proposal will result in the entry into the broadcasting market of HGC as a new operator.  HGC is simply making its broadband network available for Galaxy to broadcast its TV programmes.

36.  Proposition (3) is equally speculative. 

37.  A condition of the grant of a licence to Galaxy was that TVB divest itself of its former controlling interest in Galaxy.  TVB has done so. 

38.  On 21 April 2005 TVB agreed to sell 49% and 2% of its previous 100% interest in Galaxy to Enjoy Profits Limited and Dr. Charles Chan respectively.  In that circumstance, I do not see how granting Galaxy's application for an additional mode of transmission can by itself alone lead to TVB gaining dominance of the domestic TV market.

39.  Nor do I see how the fact that complaints have been made about alleged preferential treatment of Galaxy by TVB can be relevant at all to this judicial review.  As far as I can see, the subject of the complaints (the wrongful airing of TVB programmes by Galaxy) has no bearing on the issues here.

40.  Now assume that propositions (1), (2) and (3) have some significant evidential foundation and assume that it is in the public interest that such matters be investigated.  That is not the end of the story.  Proposition (4) does not take the analysis very far and so is of little help. 

41.  What the Authority does under BO s.27(2)(d) is to weigh Galaxy's entitlement to confidentiality with the competing demands of the public interest.  The Authority takes a view whether disclosure of the materials provided by Galaxy would or would not advance investigations in the public interest under propositions (1), (2) and (3).  Here the Authority conducted a balancing exercise and concluded that the public interest (if any) raised by propositions (1), (2) and (3) would not be significantly furthered by a disclosure of Galaxy's materials. 

42.  Apart from vague suggestions and alarmist scenarios raised by PCCW, I have seen nothing in the evidence to suggest that the Authority's balancing exercise was irrational.

43.  It is not enough for PCCW to allege that propositions (1), (2) and (3) give rise to a public interest.  Almost by definition, just about any matter connected with broadcasting will have a public element.  The burden is on PCCW to establish some unreasonableness in the way that the Authority has balanced the competing interests of Galaxy and the public at large.

44.  Proposition (5) is difficult to follow. 

45.  It cannot be a valid ground of judicial review that PCCW believes it cannot make proper submissions to the Authority because it does not have access to material which it is in any event not entitled to see.  PCCW's argument is circular.

46.  It follows from my rejection of propositions (1) to (5) that the conclusion in proposition (6) is invalid.  As Mr Po states in his affirmation, the Authority considered the public interest but did not believe it mandated the disclosure sought here.  PCCW has failed to discharge its burden of establishing irrationality.

C. Issue 3: Whether Authority's procedure unfair

47.  Mr. Beresford claims that the refusal to disclose Galaxy's materials has prevented PCCW from making informed submissions as to whether Galaxy's application should be granted.

48.  This is essentially the same point as Issue 2.  On that, I concluded that, regardless of whether PCCW's claim to be affected by the outcome of Galaxy's application was or was not valid, the Authority could reasonably conclude that the public interest mentioned in BO s.27(2)(d) did not call for disclosure in the present case. 

49.  Conventionally, when an applicant for judicial review claims that an unfair procedure has been followed, he means that a government officer did not give him a reasonable opportunity to be heard before coming to a decision.  That, however, is not PCCW's complaint here.

50.  On the evidence, before the Authority's 16 April 2005 decision refusing disclosure, PCCW was given ample opportunity to make representations (both orally and in writing) to the Authority on why Galaxy's materials should be disclosed.  Mr  Beresford accepted this much in submission.

51.  In the exercise of its discretion, the Authority came to a different conclusion from that advocated by PCCW.  Unless that decision can somehow be characterised as irrational, PCCW has no basis of complaint.  PCCW's case on Issue 3 therefore fails.

D. Issue 4: Whether irrational because Galaxy's application not treated as a new application of an application for variation

52.  BO s. 8(1) empowers the Chief Executive in Council to grant domestic pay TV programme licences.

53.  Applications for such licences (among others) are to be submitted to the Authority (BO s. 9(1)) which will consider them and make recommendations for their approval or disapproval to the Chief Executive in Council. 

54.  BO s. 9(3) further specifies that applications for domestic pay TV programme licences (among others) shall be gazetted and interested members of the public shall be permitted to make representations on the proposals.

55.  Under BO ss. 10(1) and (3) the Chief Executive in Council may impose "such conditions as he thinks fit" on the grant of domestic pay TV programme licences (among others).  BO ss. 10(4)-(6) further stipulate as follows:

"	(4)	The Chief Executive in Council or the Broadcasting Authority, as the case may require, may, where he or it considers it is in the public interest to do so, vary a licence at any time during its period of validity after the licensee has been given a reasonable opportunity to make representations under subsection (5).
	(5)	A licensee may make representations to the Broadcasting Authority in relation to any proposed variation under subsection (4) and, in the case of a licence granted by the Chief Executive in Council, the Broadcasting Authority shall fairly reflect the representations to the Chief Executive in Council.
	(6)	The Chief Executive in Council or the Broadcasting Authority, as the case may require, shall consider the representations, if any, made under subsection (5) before implementing any proposed variation under subsection (4). "

56.  Reference has previously been made to condition 32 of Galaxy's licence.  That provides as follows:

"The Licensee may employ the means of transmission and the transmission arrangements for the Service as stated in the Licensee's proposal.  The Licensee shall apply to the Broadcasting Authority for approval of any substantial change in the means of transmission or transmission arrangements. "

57.  There is a similar provision in PCCW's domestic pay TV programme licence.

58.  PCCW's Notice of Application for Judicial Review does not challenge the validity of condition 32.

59.  Mr. Beresford argues that the Authority should either have treated Galaxy's application for an additional mode of transmission as an application for a new licence or a major variation of an existing licence.

60.  If the Authority had done so, Mr. Beresford submits that either the details of Galaxy's application would have to be fully gazetted under BO s. 9(3) or PCCW should have had an opportunity to make representations about the variation fo the licence under BO s. 10(4).  On one or other hypothesis, PCCW (Mr. Beresford argues) would have been entitled to see Galaxy's material as an affected party, regardless of any public interest considerations.

61.  Galaxy's application (Mr. Beresford says) should have been treated as one for a new licence or as a major variation, because it implicitly entails a large reduction of Galaxy's capital commitments under its existing licence or involves a new party (HGC) as an operator.  The application (Mr. Beresford suggests) "discloses a wholesale change to [Galaxy's] business model" and "must involve inevitable change to Galaxy's mode of operation, business plan and marketing and sales strategy".

62.  In my view, there is no substance to PCCW's submission.

63.  First, I have already dismissed the suggestion that Galaxy's application implies a change in its investment milestone commitments.  Nor does it entail the entry of new operator.  Galaxy's proposal does not amount to a new application.  I do not think then that BO s. 9(3) comes into the picture.

64.  Second, the fact is that the Authority treated Galaxy's application as a variation to its existing licence, albeit a minor one. 

65.  In the Authority's view that minor variation could be considered under condition 32 of Galaxy's licence.  By that condition, the Chief Executive (exercising his power to impose such conditions on a licence as he sees fit) authorised the Authority to evaluate mere changes to the mode of transmission allowed by a licence. 

66.  As I pointed out, there is no challenge by PCCW in its Notice for judicial review to the vires of condition 32.  It is too late now for PCCW to challenge condition 32 in these proceedings, if that is what it is now minded to do.

67.  Third, even supposing (without deciding) that by condition 32 the Authority was only authorised to make recommendations to the Chief Executive in Council, PCCW's case on disclosure would still not be advanced. 

68.  In cases of variation, BO s.10(4) requires the Authority to give the licensee seeking a variation (as opposed to any other licensee) with an opportunity to make representations.  Since it is not the licensee seeking variation in this case, PCCW would not be within the terms of BO s. 10(4).

69.  Mr. Beresford says that nonetheless BO s. 10(4) refers to the "public interest" so that PCCW (as a member of the public and as a competitor) should be allowed a fair chance to make representations on Galaxy’s variation.  To do this (Mr. Beresford stresses) PCCW needs to have sight of Galaxy's materials.

70.  This last ground effectively repeats the arguments on Issues 2 and 3.  Those have not succeeded for the reasons set out above.

III.  Conclusion

71.  PCCW's judicial review fails.  PCCW's application is dismissed.  I shall hear the parties on costs and any consequential orders.