Network Seven has said it's "disappointed" by Federal Court's decision to dismiss its application for a review of a ACMA decision which found that a Channel Seven Adelaide news story was a 'tobacco ad'.

The Court has backed the ACMA’s decision that Seven had breached its licence by broadcasting a news piece about Coles selling cheap cigarette imports that included shots of tobacco company brands.

The ACMA had ruled that the story – aired in 2010 – contravened the Tobacco Advertising Prohibition Act. Seven argued that it had not intentionally promoted the sale of cigarettes.

However, Justice David Yates has dismissed this argument, stating that Seven had breached a licence condition by broadcasting a news segment called “Cheap Cigarette Imports”.

In his findings, Justice Yates said that “if a person means to broadcast material that gives publicity to or otherwise promotes or is intended to promote smoking…then the intention will be established”.

“The ACMA welcomes this decision,” said acting ACMA Chairman, Richard Bean. "It provides an important reminder the legal prohibitions against the advertising of tobacco are very strict. “The law serves an important public health purpose and the ACMA will continue to be vigilant in this area. The ACMA will now consider what remedial action is appropriate."

In response to the Justice Yates decision, a statement from Seven said: