Sinead Boucher, Group Executive Editor for Fairfax, said Sky TV's imposition of rules governing the use Olympics video was "unprecedented".

Sky TV has filed an injunction against Fairfax Media, who it claims has "exploited" its Olympics coverage by showing Sky videos on its website.

Fairfax Media, the publisher of Stuff.co.nz, previously decided not to send journalists to Brazil to cover the Olympic Games, saying Sky TV tried to impose "unprecedented" terms of use of its footage.

Stuff has continued to use Sky TV clips, claiming fair use under copyright law which allows websites to use a "fair" portion of footage from other broadcasters in reporting the news.

LAWRENCE SMITH/STUFF Sky TV and Fairfax came head to head in the High Court at Auckland on Wednesday over the Olympics coverage.

The pay-TV company, which paid the International Olympic Committee millions of dollars for the rights to cover the Games, sent Fairfax a legal letter earlier in the month outlining allegations of intended copyright breaches.

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It threatened court action unless Fairfax signed an agreement to abide by media accreditation terms.

Sky TV filed an injunction application on Tuesday and an urgent hearing was held before Justice John Fogarty at the High Court at Auckland on Wednesday.

Sky's lawyer Julian Miles, QC, told Justice Fogarty that Fairfax Media was the only organisation not to use the footage fairly, and said it had impacted on Sky's viewership.

"We say the way in which Fairfax has taken our footage and used it in the way they have is not reporting for the purposes of current events, it's essentially for entertainment," he said.

He said Fairfax had published lengthy clips which he said essentially showed a "montage" of the events, which he described as the "antithesis" to journalism.

"The copyright holder is entitled to spend as much time as they like on (showing key events) but to permit a competitor to do that is a step way too far because that's intruding on the very area the copyright holder is confident it will need to excite the potential viewer."

He said Fairfax had damaged Sky's core business and "deprived" it of its full investment benefits.

Ratings were not as high as Sky had expected, he said.

He said fair dealings did not extend to simply breaching copyright in the way in which he alleged Fairfax had.

"It was never intended, whether 10 years ago or today, that the fair dealings protection should be so expanded that the expectation of a copyright holder should effectively be undermined."

Fairfax lawyer David Goddard, QC, said Stuff had used Sky's material modestly.

The most Sky footage Fairfax had used in one day was seven minutes and 47 seconds worth but on another day had used just one minute and 19 seconds, he said.

There was no evidence before the court "other than speculative evidence ungrounded in any fact", that Fairfax's coverage had, or would likely to have, any impact on Sky, he said.

Fairfax had "long standing internal guidelines" about fair use and believed it had complied with those guidelines.

"New Zealand doesn't have rules about acquiring free-to-air, live broadcasting of key, live, public events. What that means is the role of the news media in informing the public is all the more important."

He disputed Sky's distinction between current affairs and entertainment.

"The suggested dichotomy between information and entertainment is not, in my submission, a dichotomy that can be sustained," he argued.

"My friend (Sky TV lawyer Julian Miles QC) must have had very boring teachers at school if, when they informed him, they failed to entertain him."

In July, Fairfax and NZME, publisher of the New Zealand Herald, opted not to send reporters to Rio under Olympic Games rules the pay-TV company wanted to impose.

At the time, Fairfax Media executive editor Sinead Boucher said the rules Sky TV attempted to impose were "unprecedented".

"In our view, it is unacceptable that a broadcast rights holder should have been given so much power to control how its competitor media organisations get to report on an event of such national and international significance," Boucher said at the time.

Among the rules Sky tried to impose was the imposition of a 30-minute stand down whereby other media organisations couldn't broadcast footage until half an hour after Sky.

On Wednesday Miles said that appeared to have caused "disgruntlement" but argued that there was nothing unusual about the terms Sky had set out.

"What was offered (to media companies) was considered beyond what they considered fair dealings," he said.

The hearing will continue on Thursday with further arguments expected from Fairfax lawyers.