It’s
now clear that the Seven Network’s so-called C7 case is in serious trouble, with
the Federal Court trial judge, Justice Ron Sackville yesterday issuing his
strongest appeal yet for mediation and ordering a week long adjournment in the
hearing, possibly to allow that to start.

The judge’s comments came at the end of possibly the worst week for
Seven so far in the costly hearing with Peter Gammell, Kerry Stokes
right hand man at Stokes’ private company, Australian Capital Equity,
having several poor days in the witness box.

He
managed to raise the suggestion that Seven itself may have been in breach of the
Trade Practices Act as well as well throwing up doubts about why the AFL was
added to the legal action, and just what Seven’s interest was in bidding for the
National Rugby league rights in late 2000.

As well
there was an issue that Seven’s legal costs so far may be a lot higher than
originally thought with an
estimate back in 2002 of $20 million by then: it is now well over three times
that figure.

This
report
in Friday’s Australian is typical of the coverage of Justice Sackville’s
comments.

The
rapidly escalating cost of the case, with Seven’s costs much higher than
thought, certainly is partly behind the judge’s comments
yesterday:

“It is clear enough that
a vast amount of money has been spent on this case,” Justice Sackville said.

“To many people in the
broader community it will be a source of surprise if not concern that so many
resources can be devoted to a single piece of litigation. It is also clear that
unless it is resolved or the issues substantially narrowed, a further vast
amount of money will be spent.”

In a comment that will not sit well with
Seven he urged the parties to talk, saying the case
will not see a clear ‘win’ for any of the 23 parties (Seven plus the 22
respondents).

Mr Justice Sackville
said Seven should talk to the AFL, the NRL and its
partner, the Australian Rugby League. He also indicated
he was reserving his right to order mediation.While adding that his
comments did not represent conclusions on any point or issue or point of law,
he added: “It is not possible for anyone to sit through 29 hearing days and some
20 days of evidence without forming some tentative views on certain issues.”

And that’s the big stick
for Seven: Without saying so, he has left the
impression that Seven’s case is going badly for it.
Seven says Sackville urged all parties to
talk and that there was an attempt to mediate before the hearing started, as
there was.

But after this week and Mr Gammell’s appearance in the
box, you’d have to be punting (can Betfair handle
this) on a settlement sooner, rather than later.
Or will News and PBL decide to string it
along, force up Seven’s costs and hang ‘Little” Kerry Stokes out to
dry?

Certainly one group of people cheering the
Judge’s comments would be investors in Seven (apart from Stokes) who are fearful
of being on the losing end and seeing a couple of years’ profits eliminated by a
$100 million plus legal bill.