Outlook: Green goes, now Allen's turn to see if Fidelity equals trust

The Crane drain; German power
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The Independent Online

In the end, Michael Green did not make it to High Noon and his moment of destiny. Charles Allen shot him in the back before he got there. The Granada board's decision to support the appointment of an independent non-executive to chair ITV "in the interests of shareholders" killed what little chance the Carlton chairman had of seeing off Fidelity and its fellow rebel shareholders.

Before the body was even cold, Granada has begun trampling all over it. Although Mr Green will never realise his dream of running a single ITV, he would still like to play a full part in seeing it through to its creation early next year. Not if Granada has anything to do with it, he won't. They want him out, and out now, not in three months time, during which his brooding, disgruntled presence could do goodness knows what damage to morale and the happy completion of the marriage arrangements.

Granada could scarcely have been more brutal had it arrived at Carlton's Knightsbridge headquarters with a black plastic bin liner marked with the chairman's name.

Can this really be the same Mr Green who only a fortnight ago formed one half of the inseparable Charles and Michael combo? Part of the double act which tripped around the TV studios telling everyone how famously they would get on together at ITV plc now that the Government had blessed their nuptials?

Can it really be the same Mr Green who said he looked forward to his young children getting to know Mr Allen as "Uncle Charles"? Can this really be the same Mr Green whom Granada publicly endorsed as chairman of the combined company two days after Fidelity and its co-conspirators had delivered the blunt message that both he and Mr Allen were toast?

Well, yes it can. But it's a funny old world is television and it is amazing how quickly the picture changed once Fidelity had been told what an asset Mr Allen would be to the merged company and how it was only his doing that the marriage was taking place at all.

Mr Allen has survived a few scrapes, including the monkey business at ITV Digital. But even he must find it hard to believe just how fabulously the script has ended. With Mr Green gone, and three out of the four executive management positions at ITV plc occupied by Granada's men, this becomes a takeover, not a merger. Ensconcing John Nelson as non-executive chairman would be the perfect epilogue for Granada. But since he advised it on the takeover of Forte and has known Mr Allen for years, Fidelity really ought to ask itself hard questions about whether Mr Nelson really fits the bill of an independent. All in the name of good corporate governance, of course.

Fidelity's quiet assassin Anthony Bolton was being magnanimous in victory yesterday, suggesting that Carlton might appoint another exec to the board to replace Mr Green. No hard feelings. Why, Carlton's Sir Brian Pitman and John McGrath could even stay on as non-execs despite the two fingers they had initially stuck up to the rebel shareholders. The word yesterday was that the two men would swallow their pride and accept the invitation, but only to ensure that the interests of Carlton shareholders were not ridden roughshod over entirely.

As for Mr Allen, he enjoys the support of Fidelity for now. But for how long will he have its trust?

The Crane drain

International Power likes to buck the trend. Whereas the fashion these days is to get into trouble for paying chief executives too much, International Power's problem is that it cannot pay them enough.

Its first chief executive, an entertaining German by the name of Peter Giller, created UK corporate history by becoming the only head of a major quoted company to be paid entirely in shares. The experiment ended in disaster after two years with the share price off by some 70 per cent and Mr Giller seriously out of pocket.

He was kicked upstairs to the job of deputy chairman on a flat cash salary while the housing allowance which had funded a rather nice Docklands apartment also came to an end.

His replacement, an American attorney called David Crane, has lasted an even shorter period of time. When he took up the job in January, it did not take his Havard-educated brain long to work out that the way things were going at International Power, the sensible thing to do was ask for a "traditional" salary enabling him to pay for the groceries in cash and not share certificates.

Unfortunately, pay rates in British utilities are not what they used to be and the fat cats of yesteryear have long since made way for a new breed of executives who have had to get used to rubbing along on much more modest packages.

Too modest, clearly, for Mr Crane who told his employers yesterday that he had decided to triple his £500,000-a-year basic by joining a bankrupted energy company back home. The perks associated with a US-style compensation package, even one emerging out of Chapter 11, come extra, natch.

Sir Neville Sims, the International Power chairman, gulped at the mere thought of attempting to match what was on offer Stateside and sent Mr Crane on his way with the usual guff about what a pleasure it had been etc, etc.

Back then to the drawing board for the headhunters Spencer Stuart. It will be interesting to see what sort of a job advertisement they draw up. Utility boss required. London head office and plenty of opportunity for travel. Salary very definitely negotiable.

German power

As fast as the Americans quit the UK electricity business, the Continentals arrive. Yesterday it was the turn of E.ON of Germany to add another string to its bow with the £1.15bn takeover of Midlands Electricity from its US owners, Aquila and FirstEnergy. Together with Powergen, which E.ON bought three years ago, the Germans now own two supply businesses, two electricity distribution networks and a big slug of generating capacity, making them the UK's second biggest player in all three markets.

The Continental effect does not end there. RWE, also of Germany, owns Innogy and the retail supply businesses covering Yorkshire and North-east England whilst Electricité de France owns London Electricity, Seeboard, the retail arm of Sweb and the distribution business covering eastern England.

In fact, draw a line from the Humber across to the Mersey and the only patches of land where European flags are not planted are the territories covered by Southern Electric and Swalec, both part of Scottish & Southern Energy.

The reason, of course, that Midlands has ended up in the hands of E.ON and not S&SE is that the canny Scots balked at the price demanded by the company's US bondholders.

Denied a transforming deal with Midlands, S&SE begins to look vulnerable. With no other deal in the offing, the choice could either be to hand back cash to shareholders or cuddle up with Scottish Power to keep warm.

The alternative to a` deal with its fellow Scots could be to disappear sooner or later into the arms of another European utility with deep pockets and a cost of capital S&SE's chief executive Ian Marchant can only dream about.

Whether the Europeans will come to regret having overpaid for UK utility businesses, just as the Americans did following their spending spree in the the 1990s, is another matter. But, sooner or later, what goes around has a habit of coming around.

m.harrison@independent.co.uk

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