Instead, the former ONdigital chief executive will join Apax, the venture capital house specialising in the media and Internet start ups - becoming one of 16 directors.
"It is hard to imagine how Stephen could have caused more embarrassment within the space of a few days, not least to himself," a friend said.
On Tuesday night Mr Grabiner had sent ONdigital into turmoil when he resigned after less than 18 months in the job. The blow to ONdigital was, say insiders, immense - he had quit at the height of the company's fierce battle to capture customers for digital television.
The embarrassment was doubled by his intention to join News Corporation, which owns 40 per cent of ONdigital's most aggressive rival, BSkyB. Matters were made even worse by the fact that, at eVentures, Mr Grabiner would report to Mark Booth, the former boss of BSkyB. "One second Stephen and Mark were at each other's throats over digital TV; the next they were cosying up to each other as colleagues at News Corp", the friend added.
Yesterday, Mr Grabiner was trying to mend fences. "I just had two really good opportunities," he said, adding: "Mark is the best media guy there is in the UK."
At BSkyB though, the insults are once again flying - with Mark Booth reported to be furious at Mr Grabiner's last-minute change of mind. "Everything had been agreed between Grabiner and us, including terms," says a News Corp insider. "We had a verbal agreement, although Grabiner had not actually signed the contract."
Insiders at ONdigital are going out of their way to portray Mr Grabiner as flakey: "He has switched jobs too often. And now he has made a complete mess of his departure. In the city your word is supposed to be your bond, and he gave his word to Mark Booth."
Mr Grabiner admits that he had been wrestling with the two offers in front of him and estimates that he has "lost a stone in weight in the last week, making the choice".
Speculation is rife that having had a series of difficult bosses - including Carlton's Michael Green and Lord Hollick at United News and Media, Mr Grabiner could not, in the end, face the prospect of reporting to Rupert Murdoch.
He does not confirm this - but says that Apax offers more in the way of "meritocracy and partnership" than he could have expected at News Corp.
Others say that the deal at Apax is simply more lucrative than eVenture's. His task in the new job will be to build Apax's media portfolio. Last year the company backed Chris Evans's pounds 84m takeover of Virgin Radio, as well as the takeover of Talk Radio by Kelvin MacKenzie's TalkCo consortium.
But Mr Grabiner will also go head-to-head with the Murdoch empire in seeking out investments in Internet start ups. Apax has a 25 per cent stake in QXL, the Internet auction house which will shortly be floated at a value of up to pounds 750m.
He says his aim is to add value in terms of management expertise as well as finance.Reuse content