Profile: Stephen Grabiner - All set for the TV showdown

Jeremy Warner meets a man who's pitting exuberance against experience as he competes with Sky for digital subscribers

STEPHEN GRABINER, chief executive of ONdigital, Britain's fledgling digital pay-TV service, seems surprisingly relaxed for a man who's about to go head to head with Rupert Murdoch in what promises to be the first big broadcasting battle of the next millennium.

"It's probably illegal for you to be in this bit of the office," he remarks en route through the chaos of construction work to his own open-plan part of the Marco Polo building, just south of London's Chelsea Bridge. "The builders are still in, you're not insured, and we wouldn't want you to have an accident."

All around us are the unmistakable signs of a business start-up - spanking new PCs on every desktop, half-built partitions, telephone technicians pulling at cables, unopened boxes, the smell of new paint and a tangible air of 'can-do' enthusiasm. Then there's Grabiner, bouncing along, full of energy and brimming over with confidence - not a sign of tiredness or stress on his boyish face despite the magnitude of the task ahead of him.

He acts very much the modern manager, filled with bonhomie and charm. His fast- expanding staff, from the lowest to the highest, are made to feel like family - all valued, all treasured, all vital to the company's success. There's a real buzz in the air.

Does he not fear even the mighty Murdoch? Not a bit of it. This disarmingly likeable young executive is used to battling it out with the world's most powerful media tycoon; he's been there before. As managing director of the Telegraph, it was he who persuaded Conrad Black to enter the newspaper price war against The Times.

Nor, in any case, does Grabiner see his latest business adventure as a battle to the death with Murdoch. "Sure we'll be competing with Sky for digital subscribers," he says. "But if all we do is steal half Sky's existing subscriber base by being price competitive, we will have failed. Our task is to expand the market for those who subscribe to pay TV from the present 25 per cent of the population to more than 50 per cent. Sky will take some, we'll take some."

Both companies aim to launch a variety of digital pay-TV channels late this autumn and already the manoeuvring for position is intense. Indeed, for a man who claims to be entirely sanguine about Sky, Grabiner seems to have taken an awful lot of trouble to learn the minutiae of its aims and ambitions.

The only papers on his otherwise clear desktop are all about BSkyB. "You see this," he says, pointing to a piece in an obscure listings magazine by Elisabeth Murdoch, Rupert Murdoch's daughter and Sky's head of programming. "It says 'Sky should be platform neutral', by which she means Sky should aim to sell itself across every available platform - satellite, digital terrestrial, and cable. That's the boss's daughter saying that. We are not at war with Sky. There's room for both of us."

Another document is by Continental Research, which used to be Sky's main media research agency. It predicts that ONdigital will take 75 per cent of all new subscribers for digital pay-TV. According to Grabiner, Continental got fired for its findings. "Our business plan envisages that the onset of digital will double the number of pay-TV subscribers. Whether that's over five years or eight years, I'm not sure, but certainly it will be within the lifetime of our first licence. We envisage having the majority of those new subscribers."

Since both Sky and cable aim to take 50 per cent apiece too, the claim that there's going to be no war begins to look just a trifle incredible. But then Grabiner has an agenda to pursue. He has to convince the City, and his two shareholders - Michael Green's Carlton and Gerry Robinson's Granada - that there's a viable future for ONdigital, lined up as it is against the big battalions and deep pockets of Murdoch's Sky.

In the end, youthful enthusiasm and energy, both of which Grabiner has in spades, are no substitute for wisdom and vision, and it's hard to know how much substance there is behind the chutzpah. So how does Grabiner stack up? At the tender age of 37, he's already established a good record of discovering viable businesses in the unlikeliest of quarters. His first was the Telegraph, which he came across in the mid-1980s as a young management consultant working for the corporate care division of Coopers & Lybrand. The Telegraph was a client.

What on earth persuaded him to swap camps from consultant to staffer? With the print unions still firmly in the saddle, newspapers were at that time about the last management position anyone would aspire to. "The Telegraph was in dire straits," he says. "It was a terrible newspaper, or at least I thought so, and it had invested heavily in new printing capacity which it couldn't use properly because the unions wouldn't allow it.

"It wasn't a business at all in the conventional sense. Nobody even had any idea how many were on the payroll since the habit was to hand the money to the unions and let them divvy it up. It could have been 2,000, it could have been 6,000 for all I knew." But within this business horror story there was a fabulous title and a brand with a surprisingly loyal and long-suffering army of paying readers.

"As is often the case, it took a change of proprietor, ownership and management to turn it round." All Conrad Black had to do, after being brought in as a minority shareholder to help refinance the company, was sit back and wait for it to fall into his lap.

Grabiner was hired originally by Andrew Knight, former editor of the Economist and Black's first chief executive. "I was only 27, and I was offered the job as marketing director on a year's secondment from Coopers. This may have been newspapers, but how could I refuse? I've never planned out my career in advance. I do things that interest me and this did."

After Knight jumped ship to work for Rupert Murdoch, Grabiner was made managing director. "It was a memorable first day in the job," he recalls. He had long been urging the Telegraph to match the price-cutting campaign launched by The Times. "If the competition does this sort of thing to you," he insists, "you only have one option, which is to match it blow for blow. If you don't, you're doomed."

On appointing Grabiner, the proprietor finally caved in and agreed to cut the cover price. "It immediately wiped pounds 300m off our market capitalisation and pounds 1bn off the sector. Within days there was a Stock Exchange investigation, because Conrad had sold some shares before the announcement, and Cazenove resigned as brokers. Quite a first week in any job."

There wasn't much of a position left for Grabiner after Black, disenchanted with the City, took the Telegraph Group private once more. "He offered me Canada, but that would have taken me away from family," he says. For Grabiner, the family network is all. From north London Jewish stock, he admits to being lost without it.

He was miserable when ordered up to the north of England as part of his next job running Lord Hollick's newspaper interests, and he vowed never to take a post again that took him away from his family, even for a few days.

Though Grabiner denies it, his time at United sounds like an unhappy one. Ambitious to run his own show, he ended up being used as a pawn in a wider power game between Lord Hollick and Michael Green at Carlton. It was Green who poached Grabiner from United to run ONdigital. Lord Hollick, who lost out in the contest for the digital terrestrial licence to Carlton and Granada, saw red and said he would hold Grabiner to his one-year contract.

"I'm not sure what Clive [Lord Hollick] hoped to get out of it - maybe a stake in ONdigital, or perhaps a guaranteed outlet for his programming. But Michael Green and Gerry Robinson held their ground and refused to play ball. In the end it fizzled out. Nobody wanted confidential boardroom discussions aired in court."

And ONdigital? "Yes of course we'll succeed." After a week that saw Sky announce an aggressively priced package of digital channels that seems to steal many of ONdigital's clothes, the City is not so sure. Grabiner's hope is that as consumers switch to digital TVs, for their additional free channels and their better-quality sound and imaging, ONdigital will be their first port of call for pay-TV. Who's going to want to install a satellite dish when you can simply "plug and play" with ONdigital?

There may be some truth in this, but as others have learnt to their cost, beating Murdoch at his own game generally requires a rather more proactive approach. So is Grabiner up to the fight? Both his brothers are high achievers. Mike is chief executive of Energis, the telecommunications company that recently made a spectacular stock market debut. Robert is one of the banking world's top IT specialists. For Stephen, then, there's a lot more riding on success than just money. There's keeping up with the family to think about.

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