Turmoil at TVNZ - how did it come to this?

Bill Ralston

"Do you want to give it a go?" Bill Ralston asked Susan Wood, and that was it. Close Up @ 7 had its first presenter.

Paul Holmes was gone and Wood was the "least risky option" so Ralston offered her the job. After 14 years in the wings, that was it.

"Bill was never one for long meetings," Wood recalled a year later, sitting opposite Ralston at an Employment Relations Authority hearing. The meetings that led to the hearing were equally brief.

Wood spoke of frustration and hurt in the six weeks leading up to the hearing - a rare insight to a world of six-figure salaries and TVNZ half-truths.

In December 2004, Ralston signed up Wood as a television war loomed. Paul Holmes was promising a ratings blitz with his new 7pm show on Prime while John Campbell was preparing to launch his 7pm current affairs show, Campbell Live.

At this stage of her career, Wood told the hearing, she was considering leaving television. "Before Paul left I had met Kevin (Stanley, her fiance) and my life had taken a good turn. We talked about whether I would continue in television.

"I have an MBA and would quite like to do things with that. I thought my career in television was pretty much up. Then Bill came down and offered me the job. If I didn't get the job I would say publicly I didn't want it," Wood said.

"I didn't want to be the one who sat there for 14 years as a stand-in and didn't get the job."

The humiliation, she said, would have been too much.

After offering her the job, Ralston left her to work out what she was worth.

Until then, Wood had been earning about $180,000 a year for working on Holmes and documentaries.

She looked at what other presenters were rumoured to be paid - including Holmes and Campbell.

Holmes was on $750,000 and had his own personal assistant. "All of Paul's expenses were left in my office so being a journalist I looked through them.

"They were considerable... $40,000 is an underestimation."

She reviewed the past 14 years. "I have rated considerably well, if not better than Paul - $450,000 is a long way from the package Paul had," she told the hearing.

"He had an enormous amount of time off. What I do is not read the news - it requires a different set of skills," she said.

There was risk because television in New Zealand was more competitive than it had ever been.

Ralston said: "If the programme had failed, Susan's career would have been in tatters and she would have been stigmatised by the failure of that programme."

Her pay, he claimed, included a premium to compensate for that.

During the 2004 negotiations, Ralston recalled he had pushed for a salary of $350,000 for Wood. She ended up getting $450,000.

Then details of Judy Bailey's new $800,000 pay package were leaked.

Wood said: "I wrongly believed nobody would ever get again the sort of money Paul had. A few weeks later, Judy did - and I couldn't believe what I had signed for."

There's argument over how they reached Wood's final figure of $450,000. But that was the deal before Close Up started. There was fine print, but Wood said: "It may sound naive but I didn't take a great interest in the details of the contract."

A former chief executive had once told her: "Susan, these relationships have to be based on trust."

Employment Relations Authority Investigator Leon Robinson, who quizzed both sides at the hearing, asked Wood: "So you're sticking to your guns and you're worth $450,000?" She replied: "I'm worth more than that."

Wood and Ralston placed their hands on the tatty Bible held by Robinson, and swore to tell the truth.

On September 13, Ralston made the first move when he dropped by the make up room about three hours out from Wood's interview with Viv D'Or, the woman who made claims of sexual harassment by National candidate Bob Clarkson.

"No contracts will be entered into until after the election," said Ralston.

Wood was left wondering if it meant the outcome of the vote would affect the salary she was paid.

"Bill Ralston has intimated to me that TVNZ is under political pressure to reduce salaries," she said.

At the hearing, Sidney Smith, TVNZ human relations manager, explained the involvement of the board. It approved a level of salary negotiation, and issued a bargaining licence up to that value. To go higher, management had to seek permission.

The system had changed after Wood won her $450,000 deal because Bailey's pay details became public. TVNZ had listened to criticisms over "what has been called a culture of extravagance", said Smith.

Ralston and Smith met chief executive Ian Fraser on September 20 to talk about Wood's pay, and to work out what bargaining power they wanted to ask the board for.

"Ian Fraser, as chief executive, had taken on the board's often-expressed view on higher pay and Ian Fraser directed Bill and me that this would be an appropriate level," said Smith.

"We very much valued Susan and recognised she would not have a positive reaction to this."

Ralston said: "We sat down with Ian and talked this thoroughly through. He was adamant the board would not accept $450,000 ... $350,000 was, in his opinion, the absolute ceiling the board was likely to approve."

Robinson questioned whether there had been any firm instruction on $350,000 from the board.

"No," said Ralston. "Nothing other than the guidance from the CEO."

Then Ralston was asked to decipher his handwritten note of the meeting: "Susan Wood renewing. $450k 1yr fixed. Open ended??? Differential over news readers. Take it or leave it $350k. Paid a premium last year in recognition of risks involved. Came to the rescue at the right time.

"This year conditions are different. Programme was an experiment. Reassurance in terms of shelf-life. Continuity. Three month notice period. Bill and Sidney to negotiate."

Wood was preparing for the October 14 broadcast of Close Up the day she met with Ralston and Smith. Ralston told Wood she had done a "fantastic job" and thanked her for her work.

He then offered her $100,000 less to continue. Wood was so stunned she said later she found it hard to go on air that night.

Ralston pointed to the new redundancy clause in the contract, and the shift from annual contracts to a full-time one. He said the security was seen as some compensation.

Ralston again told Wood she had done a fantastic job.

"He told Susan he didn't want to insult Susan by playing games and that was his best offer," said Smith.

"I was pretty shocked," said Wood. "I was looking at what could be done to mitigate this loss so I asked if there was a car," she said.

"Sidney said there wasn't."

The three agreed to take the weekend to think the contract over.

"I told Susan again she had done a fantastic job and offered an open-ended contract. I confirmed Susan's role as anchor of Close Up and a salary of $350,000."

Wood flicked through the basic contract, which also offered a morning newspaper, a broadband connection paid for by TVNZ and a carpark under the building.

"We wanted her to know that notwithstanding a significant drop, she would be our highest-paid presenter," said Smith.

Ralston asked: "How are you feeling?" Wood replied: "To tell you the truth, I'm gutted."

Wood rang lawyer Mai Chen, who in turn rang Smith that afternoon. The legal fight began.

TVNZ wrote to Wood on October 19, giving her until November 4 to make up her mind. Ralston and Smith were going overseas in November and wanted their valued staff member sorted by then.

The public airing has been excruciating for both sides.

Friends of Wood say her determination to pursue the case is not over the money but over the feeling the trust which had sustained a 20-year relationship with TVNZ is gone.

TVNZ insiders suggest the board forced the matter, wanting taxpayers to witness its public determination to pay staff less.

Wood's much-reported reaction to stress was unlikely to garner much sympathy in public. "It has affected my sleeping, eating and how I've felt," she told Robinson. "Kevin saw me shout at my children, which normally I wouldn't do."

All this over a pay cut that is almost three times the average wage.

But it is forgotten that she is only the second person ever seen as capable of doing the job - and her predecessor Paul Holmes was paid almost double her salary.

The mediator's decision is due early this week. But he has already warned TVNZ: "I think I am going to find the board has never imposed a cap of $350,000. If I find that, then it's open for these parties to go to the board," he said.

If this is the finding, it leaves TVNZ and Wood at the start of the bargaining process, with about a month before her contract expires.

TVNZ is saving money. But some viewers will be asking whether talent is being squandered as a result.

- HERALD ON SUNDAY