Telewest shake-up prompts chief executive's departure

The chief executive of the country's largest cable company is to leave with immediate effect, it emerged last night, in the wake of the latest management shake-up in the struggling UK cable sector.

The departure of Alan Michels, head of Telewest Communications, follows a board meeting yesterday to discuss management restructuring and future strategy. Mr Michels, who could pocket pounds 1m of compensation, is expected to be replaced by Stephen Davidson, currently finance director, who would become the first British executive to head up one of the top UK cable operators. Mr Davidson, a banker by training, has worked with large media clients, and was senior vice-president, corporate finance, at Lorimar, now a subsidiary of Time Warner.

The change marks the third time this year a large cable company has changed chief executives. Most recently, Dan Somers took over from Alan Bates at Bell Cablemedia, the third largest operator.

Industry sources said the changes reflected a desire to replace largely technical management with executives more attuned to marketing, in an effort to boost disappointingly low penetration rates, particularly for cable television.

Mr Michels, who joined Telewest from one of its parent companies, US West, in 1994, spent most of his career in financial analysis. Under his direction, the cable operator saw telephony penetration rates improve, although the cable television side performed far less well. He is to spend some time with his family, following his return to the US.

"I hope this means the end of a steady stream of Americans, coming in to run cable companies for two-year stints," one Telewest insider said.

Another senior industry source added: "The company has been a bit of a shambles from a customer point of view."

But Mr Michels received support from some colleagues. One said: "He has worked bloody hard in a very difficult industry."

Mr Michels was on a three-year fixed contract worth pounds 500,000 a year. He is expected to be paid pounds 1m in lieu of a two-year notice period. His remuneration had included an amount to cover tax liabilities as well as a housing allowance worth pounds 63,000 a year.

One industry observer predicted last night that the restructuring could mark a turning point for the cable industry, which has been unable to find television programming to attract customers and drive subscriptions. Telewest and the second-largest operator, Nynex CableComms, effectively dropped plans to develop cable-exclusive programming, and signed long- term supply agreements with BSkyB, Rupert Murdoch's satellite broadcaster.

The cable industry is just over halfway through a pounds 10bn plan to link UK homes to cable for television and telephony services. The sector has been given a rough ride by the City, which has been impatient over slow growth of the subscriber base.

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