Channel Seven decided against bidding for the top-rating MasterChef Australia program because of fears it could jeopardise the television network's bid to retain its Australian Football League (AFL) broadcast contract and upset the Murdoch clan, a court has heard.
The revelation emerged during the first day of Seven's court action to delay its former chief sales and digital officer James Warburton starting his new job as chief executive of Ten Network Holdings Ltd.
Ten announced Warburton's appointment on March 2, with a start date of July 14 this year.
Seven barrister Tony Meagher, SC, told the NSW Supreme Court that conditions in Warburton's employment contract and participation in a management equity plan meant Warburton had to wait until October 2012 before starting work with any other media company.
Meagher said that on a worst-case scenario, Warburton should wait until at least March 2012, given he knew key commercial information about Seven such as advertising rates, budgets and sales figures that were still "live" for the remainder of 2011.
Seven commercial director Bruce McWilliam told the NSW Supreme Court that Seven boss Kerry Stokes made the decision not to take MasterChef Australia from the Ten Network.
"The producers of the program rang up and said they were available," McWilliam told the court.
"They were at an impasse with Ten and asked us if we would be interested in bidding for them."
But Stokes feared that taking the MasterChef franchise, which is held by Elisabeth Murdoch's production company Shine, from Ten would create "bad blood" and possibly derail Seven's attempt to retain its AFL contract, McWilliam said.
"Elisabeth Murdoch would never do over her brother," McWilliam told the court.
Ten announced in February that it will continue to screen MasterChef Australia for a minimum of three years from 2012 onwards.
Elisabeth's brother Lachlan Murdoch is acting chief executive of the Ten Network, which is jointly bidding alongside Seven for the next AFL broadcast contract.
While Seven and Ten were bidding together, each network retained their own strategies and financial numbers, the court was told.
Murdoch also sits on the board of News Corporation, which holds a 25 per cent stake in Australia's largest pay TV company Foxtel.
Warburton, who was present in court on Tuesday and due to take the witness stand later in the week, has launched a cross-claim against Seven alleging that his former employer wrongfully repudiated his contract.
The termination of his contract, the court heard, was said to have taken place during separate conversations that Warburton had with David Leckie, the chief executive of Seven Media Group, and Stokes.
Barrister John West, QC for Warburton, said that Leckie told his client to "go now" after being informed of his decision to leave.
Lawyers for Seven said Leckie was not authorised to repudiate Warburton's contract.
West said that Stokes regarded his client as a competitor immediately after being informed of the move to Ten, and that the Seven boss did want Warburton to stay.
" Leckie was not prepared to recognise that not only was there a successor waiting in the wings, but standing outside his door," West said.
"That was why Warburton came to the conclusion what Stokes was trying to bring about wasn't going to happen."
Seven Media Group is the vehicle that houses Seven's television, magazine and online properties.
Meagher said that Warburton was still being paid by Seven.
The case before Justice Michael Pembroke continues on Wednesday.
Seven Group Holdings closed down 11 cents at $8.98, while Ten Network Holdings ended up three cents at $1.365.