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Tova O’Brien employment stoush a ‘wake-up call’ on restraint clauses

Full ERA case could have been a PR stunt for new station, says one commentator.

Dita De Boni Tue, 25 Jan 2022

The tight race for attention and a shrinking pool of advertising dollars among the country’s top media companies lies behind Discovery’s quest to ensure Tova O’Brien honoured her employment contract with the company to the letter, legal and media commentators say.

Yesterday, the Employment Relations Authority found largely in favour of Discovery when it ordered the former Newshub political editor to pay $2000 for ‘breaches of her employment agreement’ in not adhering to a three-month restraint of trade with the company. 

The fact O’Brien lost the case was not surprising, according to those spoken to by NBR, but the fact it had got to the ERA was slightly unusual, as parties to these types of cases usually come to a private settlement.  

It did, however, reflect how cut-throat the media market is, particularly in the crucially important breakfast time slot, which generates a large proportion of the $1.25 billion in annual advertising across radio and television.  Radio and television advertising continues to decline year-on-year (even factoring in Covid lockdown slumps) while digital advertising absorbs more and more of the total spend of around $2.5b.

After consulting employment lawyers, O’Brien had resigned from Newshub at the beginning of November last year, timing her move to coincide with her start date on MediaWorks’ new talk radio station, Today FM, this week (in preparation for the station’s launch). She has also done promotional work for her new job between leaving Discovery and now.

While the ERA ruled O’Brien should have adhered to the restraint of trade clause, it also modified the three-month restraint by five weeks to seven, meaning she is free to begin her new role hosting the morning show at Talk FM on March 14. She will be competing against timeslot king Mike Hosking on ZB and, eventually, new entrant Sean Plunket on The Platform in the slot. 

Mike Hosking

On the face of it, being a political editor of the 6pm news and being the host of a morning talk show – only some of which concerns politics – might seem like two roles with little overlap, as O’Brien argued. But Amanda Wilson, brand, business and media strategist with the These Guys I Know agency, said the competition was for attention, with more attention equalling more advertising revenue.  

And all media competed for it, regardless of timeslot, she said. 

“To think about news brands within constraints of timeslots is quite an old-fashioned view,” she said. 

“Timeslots are becoming less relevant - particularly for roles like political editor. This is one of the most important roles on a network, it can define an entire brand and is really time and channel-agnostic.

“Given that, particularly in the Covid era, we are ready for breaking news at any time - and we’ll consume it wherever we are and via whatever medium suits.” 

Paul Henry 
A former head of marketing and PR at MediaWorks, Wilson said that the launch of Paul Henry’s breakfast show in April 2015, simulcast on TV and radio, was designed to be watched at home first and then continued in the car during the morning commute: “The channel shifted, of course – from MediaWorks’s-owned TV to MediaWorks’s-owned radio – whilst, ideally, the attention did not. 

Amanda Wilson

“That was years ago now, somewhere after the demise of Sunrise and before the launch of the AM Show, but media is now even more fragmented and the fight for attention during breakfast hours more competitive than ever.”

Gavin Ellis, who submitted evidence to the O’Brien hearing as a neutral media expert, also referenced The Paul Henry Show to talk about how ‘sticky’ an audience was throughout the morning, while noting specific data was thin on the ground.

“All media compete to one degree or another for audience and advertising – that there is direct competition there across the board and across media,” he said.

“I also said although I could not quantify it, because I have no data to back it up, I suspected that with morning breakfast programmes, certainly before people go to work, that there would be some competition between whether they watch a television breakfast show or listen to radio.”

“There’s also the unknown quantity – we don’t know how many people may have watched, say [Paul Henry’s] morning show and then continued with it on radio when it was simulcast – or how many moved to an alternative radio programme,” he said. 

Wilson said O’Brien was an attractive-enough talent to draw audiences towards any offering on any media “meaning her highly credible and well-known brand is such that it will entice people to sample a new media offering - in this case Today, which is, of course, why they would have wanted her in their line-up.”

Gavin Ellis.

She said it was a compliment to O’Brien that Discovery had put up the fight to restrain her, while also noting the legal stoush presented an unmissable way for MediaWorks to “build awareness of the new Today brand”.

Restraint of trade 
While media have their big celebrities that attract the attention of audiences and therefore advertising dollars, there are often other, more prosaic, business reasons why companies choose to enforce restraint of trades coming under the title of ‘proprietary interests’. 

Employment law specialist Jennifer Mills said restraint of trade provisions now appear to be common in many individual employment agreements and are not limited to high-profile or executive roles. Although the cases are frequently resolved between the parties, she said there was increased litigation when the labour market was tight, as it is presently. 

“Very few cases are litigated and those cases which are litigated tend to be the ones where the employer believes that there would be significant damage to their business if the restraints are not sought to be upheld,” she said. 

She said restraint of trade provisions were particularly common in the advertising and insurance industries and also in sales roles. 

But ‘mere competition’ would not cut it as an employer’s argument: “The general principle is that restraints of trade are prima facie void, and are therefore unenforceable, unless the party seeking to enforce the provision establishes that the restriction is reasonable.”

Jennifer Mills.

“An employer seeking to enforce a restraint must show that the employer has a reasonable proprietary interest which is capable of protection … some advantage or asset which can be regarded as the employer’s property. An employer may possess a proprietary interest in trade secrets, confidential information and its business or trade connections.” 

Agreement
Jeremy Ansell, an associate with Jackson Russell lawyers, said the stringency with which Discovery took steps to enforce the restraint of trade clause suggested the level of proprietary information being protected was quite high. The case refenced a contact with the Reid Research polling company they were trying to protect as well as sources within Parliament so crucial to a political editor’s job. 

O’Brien’s contract also prevented her from taking "any role" with a competitor within that three-month period, rather than specifying that she not take a directly comparable role. 

“I guess because they’re a bigger company they have the resources to try and uphold the restraints too,” he said. “They are not a small employer.”

While Discovery Inc is a multi-million-dollar media conglomerate with big pockets, however – and one which O’Brien reported having a positive relationship with over 14 years - Ansell said it was unwise to assume any employer would not try and enforce a restraint, and the case provided a wake-up call.

“If you read through [O’Brien’s] case, she says she assumed [the restraint of trade] would not be enforced punitively and she thought she was going to a different type of role and it didn’t apply. And then she’s suddenly found herself in a situation where not only does it apply, but it’s been held up by the ERA.

“So it is unwise to assume that the employer is not going to try and enforce their rights at the end of the employment relationship, even if it has been a really good relationship.”

 

Dita De Boni Tue, 25 Jan 2022
Contact the Writer: dita@nbr.co.nz
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Tova O’Brien employment stoush a ‘wake-up call’ on restraint clauses
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