Sky Television says Fairfax's use of Olympic Games video clips directly competes with its own broadcasts and it wants an injunction against the media company to ensure its copyright "was not eaten away and undermined", the High Court has heard.
Sky's lawyer Julian Miles, QC, said the company had spent millions of dollars for the rights to broadcast the event.
Miles said the injunction wasn't an attempt to prevent New Zealanders from watching the Olympics and that Sky had 12 channels devoted to the Games, with about 15 hours of coverage a day being screened on free-to-air Prime Television.
"We say the way in which Fairfax has taken our footage and used it in the way they have is not reporting for the purpose of current events, it is essentially for entertainment," Miles told Justice John Fogarty in the High Court at Auckland yesterday.
"The exploitation of Sky's footage competes directly with what it paid for", he said.
It damaged Sky's core business and deprived the television network of the full benefit of what it paid for, he said.
"Continuous posting [online] of video clips effectively produces an ongoing highlights package which is the antithesis of news reporting," Miles said.
He said the Fairfax website stuff.co.nz was posting clips of the Games that remain online for as long as the media company chooses.
"You have a continuous mounting montage of highlights," he said.
"It directly competes with continuous filming that Sky has set up on its 12 channels and the free-to-air Prime."
There had already been a dip in the viewer numbers that Sky had anticipated, Miles said.
He described Fairfax as "an outlier" both internationally and locally, comparing its actions to the way that NZME - publisher of the Herald - MediaWorks and TVNZ were using Olympics footage.
Fairfax, for instance, had run a 55-second video from a women's rugby game while another media company used 15 seconds of footage, he said.
Before the Olympics even began, the use of video footage had proved a contentious issue for both Fairfax and NZME.
Both news organisations withdrew their reporting teams from Rio after failing to secure an agreement with Sky over the use of Games footage on their news websites.
Miles said in court this afternoon that what Sky had offered other media organisations was well beyond "what fair dealing might amount to".
Fairfax is defending the injunction and its Queen's Counsel, David Goddard, told Justice Fogarty this afternoon that the company's use of Sky's material was "modest".
A function where videos would keep playing one after the other on stuff.co.nz had recently been disabled for Olympic material, he said.
He rejected Miles' "dichotomy" between news and entertainment and suggested his fellow lawyer must have had "very boring teachers at school".
"Information and entertainment on a good day are not mutually exclusive," Goddard said.
He agreed when Justice Fogarty asked if the video clips at issue were "modern day reporting".
Reporting of current events needed to be done in a way that the public was interested in, Goddard said.
"There's no point in attaching little messages about the outcome of events to the legs of a thousand pigeons and releasing them from the Fairfax building," he told told the judge.
He said Fairfax had long-standing internal guidelines on what represented fair use and had complied with these.
It strived to act responsibly and believed it had done so.
"The fact that Sky's expectations about revenue haven't been met tells us absolutely nothing about the impact of any conduct by Fairfax," he said.
"New Zealand doesn't have rules about requiring free-to-air live broadcasting of key public events and what that means is the role of the news media in informing the public is all the more important," he said.
The hearing continues today.