Graf under fire as Mirror cracks

Philip Graf, chief executive of Trinity Mirror, is coming under increasing pressure to quit the helm of the publishing group after a falling out with Piers Morgan, the editor of the group's most successful title, The Mirror.

Sources close to the newspaper group say that Mr Graf and Mr Morgan have been on bad terms for more than a month after having a disagreement over cost-cutting.

Mr Morgan believes he has the support of Sir Victor Blank, the group's chairman, in the battle against Mr Graf.

The story circulating around Trinity Mirror's headquarters in Canary Wharf in recent days has been that Joe Sinyor, who was hired a year ago from Sony as executive director (newspapers), is being lined up for the chief executive's role.

Sir Victor, a former merchant banker who also chairs GUS, is close to Mr Sinyor, as they were both on the board of Pentos, the publishing group, and also know each other socially.

Mr Morgan is understood to have accused Mr Graf of going back on an agreement to "simply manage" the long- term decline in circulation at The Mirror.

This strategy, agreed at the time that Mr Graf's Trinity International bought Mirror Group in mid-1999, involved investing in the national titles so that they could win market share over their main rivals – such as News International's The Sun and News of the World. However, six weeks ago Mr Graf decided to respond to the weak advertising market by cutting costs at Trinity Mirror.

He said the group would save at least £25m in the current financial year and over £30m next year, a move that could see the loss of 800 jobs.

The cuts brought a revival in the company's share price, which had fallen from 545p to 370p in a year, valuing the entire group at less than the £1.2bn Trinity paid for Mirror Group. They closed at 397.5p on Friday. But the move led to a furious response from Mr Morgan. He is understood to have voiced his unhappiness at a management meeting when investment plans for The Mirror were under discussion.

His position within the group was secured earlier this year when he was made editorial director for all the national titles – encompassing the Sunday Mirror and the Sunday People.

This was despite the lingering concerns about his role in the City Slickers scandal, when he purchased shares in a computer company, Viglen, which was being tipped the same day in The Mirror's financial pages.

Senior executives within Trinity Mirror have spoken of tensions building between the editorial team running the national titles and the senior executives, who all come from the regional press, for some time.

City analysts have pointed to the fact that only Paul Vickers, the company secretary, is left from the executive board of Mirror Group prior to the takeover by Trinity.

David Montgomery, who turned the company around, was forced to resign by Sir Victor ahead of the deal with Trinity, while John Allwood, who took over as chief executive, lasted only a few months before leaving to join Orange.

Both Sir Victor and Mr Graf were on holiday last week and were unavailable for comment, while Mr Morgan is recuperating from illness.