Outlook: On the hook as administration beckons at nuclear generator

Bloomsbury magic; AOL Time Warner

The final denouement approaches at British Energy, and unhappily for the nuclear generating company's chairman, Robin Jeffrey, something pretty dramatic will have to be pulled out of the hat if it is not to be the administration that ministers seem minded to order. Technically, it is not the Government's decision, but in practice it is, since administrators will have to be called in if the Department of Trade and Industry refuses to roll over its £410m financial lifeline next week.

The main argument against administration is that, as with Railtrack, it might end up costing the taxpayer a good deal more to allow the company to go to the wall than to keep it on life support until a longer-term solution to nuclear's problems is found. A related argument is that if the Government fails to come to British Energy's rescue, what limited chances there were of the private sector financing new nuclear build will have been buried for ever.

The parallels with Railtrack are hard to ignore. If things were bad at the time Railtrack was put into administration, they got a whole lot worse, both financially and operationally, afterwards. The same could easily happen with British Energy. Operationally, the business would inevitably go into a steep decline. An administration would also allow the Canadian government to take control of the group's potentially valuable Bruce nuclear power stations in Canada without compensation. Meanwhile the British government would have to bring a £14bn nuclear decommissioning liability back on to its own books, at least temporarily.

Against that, the costs of continuing to support British Energy may be comparatively small. British Energy insists the ongoing cash outflow isn't that great, and if something were done immediately on the Climate Change Levy and business rates, it might be halted altogether. The other major downside of an administration is that the Government would in all probability end up having to take the power stations back into public ownership. Stripped of all debt, the administrators might be able to find buyers, but only if the Government agreed to take over responsibility for decommissioning, in which case the stations might as well be in the public sector, as the Magnox plants are.

The nuclear industry has always had an unstable relationship with the private sector. When the electricity industry was originally privatised, nuclear had to be taken out of the mix to persuade investors to buy. It was only later that the City came up with a structure to achieve the impossible. If the new electricity trading arrangements had existed then, it could not have been done, and it is with some justification that investors complain the goal posts have been unfairly shifted.

Nuclear power in Britain only exists because of public policy, with the modern policy goal of reducing carbon dioxide emissions now added to the original two of having nuclear capability for military reasons and reducing our dependence on imported energy. The Government says it wants to find a private sector solution to nuclear's problems. Administration doesn't obviously supply it, and if that's the route ministers are determined to go down, they should perhaps also be prepared to recognise it probably means renationalisation too. The alternative is to extend the lifeline to British Energy long enough for bankers and bondholders to work out a debt-for-equity swap that might make the company commercially viable again.

Either way, shareholders will be lucky to end up with as much as a ten bob note.

Bloomsbury magic

Luck is always a bigger factor in business success than most entrepreneurs care to admit. Nigel Newton, chairman of Bloomsbury Publishing, would claim it was more than luck that caused his company to sign up an unknown author called JK Rowling. The judgement of his editors might have entered the equation too. None the less, even Mr Newton could not have foreseen the sensational success that Ms Rowling's Harry Potter novels would become.

In just six years, Harry Potter has established itself as quite possibly the greatest book publishing phenomenon of all time, ignoring the religious texts that is. No other work of fiction has sold in such numbers, let alone at such speed. Nor has any other series of novels had such international appeal.

New Yorkers used to queue at the dock for delivery of the latest installment of Little Dorrit when Charles Dickens was churning them out in the 1850s, but even by the standards of their time such examples of cross-border publishing success don't even begin to match the wonders of Hogwarts. Transformed by today's global media village into an overnight worldwide phenomenon, the trainee wizard's mass appeal appears to transcend all the usual boundaries of nationality, language, race, religion and creed.

Unfortunately for Mr Newton, an easy going Anglo American who set up Bloomsbury in the mid 1980s, he owns the rights only to English speaking editions outside the US. Foreign language editions, the merchandising and film rights, and the lucrative US market, belong to others. Even so, what he did buy has proved quite enough to transform his tiddler of a company into one of the best recognised names in international publishing. Time, surely, to do what successful publishers usually do – don the tweeds and retire to the country with the labradors?

Not a bit of it. Bloomsbury has used the success of Harry Potter to sign a growing array of English speaking writers, both established and new, while the Rowling cash machine is being spent on acquiring a series of repeat income publishers and on cautious expansion into the US. Half-year figures published yesterday confirm the company's continued progress.

Some new and genuinely innovative reference books, among them Business – the Ultimate Resource, a hugely ambitious reference book, are being added to the growing stable of old reliables, such as Who's Who and Whitaker's Almanack. The effect is to build an annuity of income to compensate for the inevitable lumpiness of the bestsellers. Bloomsbury has so far managed its Harry Potter luck with masterful effect, so much so that worrying about when things might go wrong must sometimes give Mr Newton sleepless nights. Now if only JK Rowling could be persuaded to get off the marital bed and complete that fifth Harry Potter manuscript, we'd all be happy.

AOL Time Warner

Corporate America has disappointed on so many fronts over the past year that the continued survival of Steve Case as chairman of AOL Time Warner shouldn't perhaps be much of a surprise to anyone. Gerald Levin, former chief executive, has rightly paid for Time Warner's disastrous AOL merger with his job, so how come Mr Case, who persuaded Time Warner into an acquisition that established new records in value destruction, manages to hang on?

One reason is that under the terms of the merger, a majority of more than three-quarters of the board is required to boot him out. During the boom, nobody thought to challenge this crafty little ruse, even if they noticed it. AOL has utterly failed to provide Time Warner with the digital distribution it promised. It is also under investigation for allegedly misleading Time Warner's shareholders by improperly inflating its revenues. Mr Case should have the good grace to go quietly. Unfortunately, grace is these days not a quality much in evidence across the boardrooms of corporate America.

jeremy.warner@independent.co.uk