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TV and radio non-compete clauses: necessary evil or just evil?

Frank Ski
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You almost never hear a radio station personality on Friday jump ship and start on a rival one in the same market the following Monday. Same with TV reporters and anchors.

Why?

The dreaded non-compete clause.

They’ve been around for decades. They vary in length and scope but typically they limit an employee from jumping ship within the same metro market in the same genre. Lengths I’ve heard most often are three to six months.

But recently, I’ve heard longer ones.

Nick Cellini and Chris Dimino, after getting fired in June by 790/The Zone, were both saddled with nine-month non-compete clauses. (Steak Shapiro, as a former owner, negotiated his down to a mere three months.)

And Frank Ski, after leaving V-103 in December, 2012, cannot return to Atlanta airwaves until December, 2013. Yes, that’s a 12-month noncompete clause, the longest I’ve ever heard. (He has since started a show in Washington D.C.)

It’s fairly easy to see why these clauses help the employer. They provide a disincentive for any talent to switch stations and take their popularity with them. A station invested x amount of dollars building  that personality’s brand and doesn’t want to sow confusion by having a rival pick them up immediately.

One radio executive, who declined to be identified, calls it a “cooling-off period. When you’re a radio station, you’re establishing a relationship with that audience and that brand. This gives us space. Noncompetes work for me and against me. There’s talent who wants to work for us. We have to make a decision if we can wait six months.”

Management may argue part of the compensation while an employee is employed includes the value of the non-compete. In other words, they are given extra money to cover the time they might be off the air.

Ultimately, the station inserts the clauses to help reduce the value of the personality in the market because in most cases, “it’s out of sight, out of mind,” said Donald Woodard, a local entertainment attorney who represents Mo Ivory, Egypt Sherrod and Rashan Ali, among others. The longer a radio or TV person is off the air, the easier people will forget about them and move on.

While many morning shows were never quite able to match their initial success at other stations, Ryan Cameron was able to overcome six-month non-compete breaks in 1995 (between V-103 and Hot 97.1) and in 2004 between Hot and his return to V-103). V-103 in 2004, before Cameron could go on the air, used his kids and wife to do promos. His popularity was not diminished at all in either case.

The Zone came up with a way to keep the 2 Live Stews (Ryan and Doug Stewart) off the air even longer than six months: it took the two brothers off the air last September and paid them through December so they ultimately were away from Atlanta airwaves for nine months, not six, which didn't help them at all. They have yet to get a radio gig in town since the end of June, when their non-compete clause was up.

Jamie Bendall, a local attorney who has represented radio and TV personalities and runs the Punchline Comedy Club, said the “investment" argument on the part of radio stations is far weaker than it used to be. “Companies used to buy billboards, put your name on buses. They’d run commercials. They hardly do that anymore,” he said. “That investment in you is frequently diminished in comparison to what it was.”

Bendall has a point. I can’t recall the last time a radio personality was promoted on TV. I hardly ever see individual radio or TV personalities on billboards. He also feels restrictions should be lightest when the station chooses to let someone go as opposed to someone leaving on their own accord.

Plus, he said there are fewer employers than there used to be, especially in radio. “On the other side,’ he noted, “because there has been a reduction of employers, few of them want to battle each other over the covenant.”

Indeed, there isn’t a lot of incentive for personalities to fight non-compete clauses in court. They would be deemed troublemakers and stations, in a gentleman’s agreement, adhere by them even if a judge might consider them onerous.

And in 2011, Georgia modified the rules about such restrictive covenants. Now judges can modify an overly restrictive non-compete clause rather than strike the entire provision. (Some states don't recognize them, as former Star 94 host Steve McCoy noted, including California.)

Norm Schrutt, a former radio executive (he ran Kicks 101.5 at one time) and a long-time agent to local personalities such as the 2 Live Stews, John Kincade and Jimmy Alexander, said the higher someone is compensated, the more likely a radio company will request an extended non-compete clause. That's apparently what happened to Ski, one of the highest paid jocks in town.

In general, non-competes are of little to no benefit to the employee because they are rarely compensated at all during the noncompete period – unless they find a job outside their primary line of work.

“Quite honestly, everybody hates them,” said Brett Martin, a former correspondent for Fox 5’s “Good Day Atlanta.” “They’re awful for the working man or woman just trying to support their family. It totally benefits the station.” In comparison, TV producers and off-air people can move from station to station, no problem, he noted.

But many personalities accept it reluctantly as the price of doing business.

 “I signed the contract,” Cellini said. “It’s just one of those things in business. It’s about leverage.”

McCoy, in a Facebook email, said when he had six months off after B98.5 let him go,  he made he best of it and enjoyed spending quality time with his family in the mornings and past 9 p.m. during that time. But he said he still had to hunt for a job. He and Vikki Locke ultimately found a new home at B98.5, which lasted a little under two years.

In the case of Dimino, 680/The Fan picked him up last month and has him working at the station, but he can’t be on the air until March. So he does reporting, sales calls, production, anything but his primary hosting duties.

Occasionally, a station will give a personality a break. CBS let Mara Davis go from her non-compete a year ago when she left Dave FM because CBS changed the format to sports talk and didn’t own any stations she might conceivably compete against. (Davis wasn’t able to find a comparable radio job but is now on WGST weekly on Saturdays hosting an Atlanta Eats food show.) "You make a logical plea," said Schrutt, who represented Davis, "and in most cases, they'll acquiesce."

So non-competes are a necessary evil, a negotiable tool in the contract tool box for personalities and agents.  They aren’t going away. And in this changing media world, the power tends to go to management.

If you’re a law nut, here’s Georgia case law that goes back 30 years on non-compete clauses.

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