So will Ten’s new CEO James Warburton be able to take up his new role at Ten in July, as the network announced yesterday?
What is curious about the Ten announcement is that the network says Warburton won’t be joining until July 14, but makes no mention of whether the Seven executive has a standard no-compete clause in his contract. Ten obviously understand that he had three months to go on his contract with Seven, but seemed ignorant of the other point.
From my TV experience, and from what I have been able to learn today, there is a no-compete clause in Warburton’s contract. Did anyone on the Ten board — or Lachlan Murdoch — make inquiries in this area?
Stars have it, producers, especially senior producers have it. And senior executives, particularly at Warburton’s very senior level, certainly have it in their contracts.
Usually the networks enforce the no-compete clause by paying the departing executive what they are owed under their contract (plus superannuation, etc) and then another sum to enforce the no-compete period. And the more important you are, the bigger the sum and the slower the payment to make sure the executive or talent in question does remain out of reach for the new employer for the required period of time.
So what happens now? Will Seven enforce it? Can Ten and Warburton negotiate a sort of “transfer fee” with Seven? Will Warburton try to refuse the payment and claim the no-compete clause doesn’t apply to him?
Warburton has in his head all Seven’s programming and selling strategies for 2011 and possibly for part of 2012. He knows the programs and the ideas to market them to advertisers. That’s why there are strict no-compete clauses at this level. Warburton would have known of it. Seven will be silly to allow him to go to Ten earlier than he should.
Did anyone at Ten stop and think about the no-compete clause, or will Ten try to break it in court (plenty of people have tried and failed)? And Ten’s investors are certainly owed an explanation, after all Warburton will be paid $2.2 million a year plus other benefits.
James Packer’s resignation from the Ten board remains unexplained (a lot of theories yesterday and today). Did he wonder about such service agreements? (He would have his senior executives at Crown on similar arrangements and would have seen similar agreements when he was running PBL and the Nine Network).
Warburton has to remain on “gardening leave” until then so as not to compromise his knowledge of what Seven’s business plans are. Seven CEO David Leckie described it yesterday in a statement: “Seven Media Group wishes James Warburton well in his new role at Ten, which he will be taking up subject to his contractual commitments.”
Those commitments would include the no-compete clause and the three months to go on his contract. This means he can’t participate in the strategic review (can he overtly do it?).
What will happen now? Will Murdoch conduct the review and hand Warburton a course of action he might not agree with? Can Warburton talk to Ten while he is on “gardening leave”. If he does so, would he breach the agreement and would Seven take action to enforce it?
Will the Ten board now delay the review until Warburton can do it? After all, he is going to be the one whose pay and reputation will be on the line. He’d be silly to think he could could follow a course of action that he didn’t agree with. But first to wriggle free of the no-compete clause.
There’s a good TV program idea here: Undercover Boss. Oh, wait…