Contract delays Channel Seven executive’s move to Ten

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Contract delays Channel Seven executive’s move to Ten

The Supreme Court of NSW has decided that television executive James Warburton will have to wait until 1 January 2012 before starting his CEO role at Ten Network Holdings Ltd.

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The Supreme Court of NSW has decided that television executive James Warburton will have to wait until 1 January 2012 before starting his CEO role at Ten Network Holdings Ltd.
 
[Full text of this case: Seven Network (Operations) Limited & Ors v James Warburton (No 2) [2011] NSWSC 386 (12 May 2011)]

Justice Pembroke’s decision disagreed with the parties’ submissions with Ten wanting a quick start and Seven arguing for October 2012.

Justice Pembroke said there was no real or sensible possibility that Mr Warburton would be in a position after 1 January 2012 to take advantage of any confidential information acquired while at Seven.

Mr Warburton is bound by an employment contract with Seven which runs, according to the Seven, until 14 October 2011. He is also bound by a management equity participation deed (MEP Deed) which, among other things, was designed to protect the multi-million dollar investments of Seven Network Limited and Kohlberg Kravis Roberts & Co LP (KKR) in Seven Media Group Pty Ltd (SMG).
 
When the hearing commenced, SMG was the parent of Seven Network (Operations) Limited (SNOL), the operating company in the Seven group and Mr Warburton’s employer. KKR is a well-known private equity investment firm based in New York which conducts its business on a global scale. The MEP Deed imposes lengthy restraints on the executive participants in the scheme, preventing them from competing with SMG or any of its subsidiaries after the participant has ceased to be employed or engaged by a company in the group.
 
Conclusion
 
Justice Pembroke concluded:
‘Mr Warburton is clearly a redoubtable talent who is respected, sought after, and even fought over …
 
I should do no more than the minimum that is reasonably necessary to protect the plaintiffs’ legitimate commercial interests. And I should strive to limit the hardship to Mr Warburton. The unfortunate but necessary consequence of my orders is that he will be sidelined for the whole of the balance of calendar year 2011. If he becomes the chief executive officer of Network Ten from 1 January 2012, Mr Warburton may well represent a competitive threat to Seven, but this will not realistically be because of his retention of confidential information acquired by him at Seven prior to 2 March 2011, but because of his skill, talent, personality and past successful record in the industry.
 
I do not think that there is any real or sensible possibility that after 1 January 2012, Mr Warburton will be in a position to take advantage inadvertently of any relevant confidential information acquired by him at Seven before 2 March 2011.
 
And I do not think there is any prospect that he will do so intentionally …
 
When account is taken of the gardening leave to which Mr Warburton has been and will continue to be subject, and allowance is made for the absence after 1 January 2012 of any realistic likelihood of advantage to a competitor, and taking into account my desire to avoid any more hardship to Mr Warburton than is necessary to protect the legitimate interests of the plaintiffs, I have concluded that the result should be as I have explained …’
The defendant (Warburton) was ordered to pay 70% of the Seven’s costs of the proceedings.
 
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