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Last Updated: Tuesday, 21 October, 2003, 09:56 GMT 10:56 UK
Why Michael Green had to go

Analysis
By Jeff Randall
BBC business editor

So now we know: when it comes to a battle between those who own the businesses and those who run them, put your money on the former every time.

By ousting Michael Green from the soon-to-be-created ITV plc, the City's professional investors have stamped their authority on the debate over corporate governance.

Shareholder power has rarely been asserted in a more robust or aggressive manner.

For while we've become used to investors kicking up a fuss about fat-cat pay or throwing out a boss of a failed company (Marconi and Cable & Wireless come to mind), it's a long-time since we've seen the incumbent chairman of a viable business with a promising future dumped in such a ruthless way.

Volcanic temper backlash

Michael Green, Carlton chairman
Michael Green has lots of charm, and a big bad temper
Green has paid the personal price for his part in the ITV Digital fiasco, which cost the combined shareholders of Carlton and Granada about 1.2bn.

He also suffered a backlash from investors who for years had to endure his volcanic temper and a preference for confrontation rather than conciliation.

The fact that Charles Allen, Green's counterpart at Granada, is being allowed to stay on as chief executive of ITV plc reflects the City's preference for some level of continuity rather than a glowing endorsement of the Granada boss.

Allen now has probably one year at most to prove himself capable of lifting ITV into a new era of prosperity. But don't underestimate his ability to survive. One of the lessons of this the extraordinary episode is that, when it comes to narrow escapes, Allen would give Harry Houdini a run for his money.

More trouble to come

ITV digital logo
Shareholders are still angry about ITV Digital's collapse
Green's ill-fated attempt to cling on to the top job at ITV was the triumph of optimism over experience.

Once fund management giant Fidelity had signalled that 35% of Carlton's shareholders wanted Green out, he was holding a one-way express ticket to the Exit.

Some will see the loyalty of Carlton's directors, who tried to rally support for Green, as commendable. But all they have done is store up trouble for themselves and the group.

It's hard to see how an ITV board can now be constituted with a full representation of Carlton directors, given that to a man they thumbed their noses at the company's biggest shareholders.

Forgive 'n' forget is not a policy the City accepts readily.

Throwing Green to the dogs

As for the Granada directors who voted unanimously to appease their shareholders and remove Green from ITV, what else could they have done?

Presented with a stark choice between self interest and fraternal goodwill, they had little difficulty opting for the former.

Throwing Green to the dogs must have been one of the least challenging decisions the board has faced during this fascinating saga.

Sticking with Green would have eventually forced their own removal because the big investors in Carlton, who also dominate the share register at Granada, had clearly demonstrated a resolve to sack anyone who stood in their way.

Charles Allen's challenge

And let's not forget that the rapprochement between Green and Allen happened only very recently. It was forced on them by business necessity rather than a sense of mutual love and understanding.

For many years, Green and Allen had ripped lumps out of each other as bitter commercial rivals with little appreciation of each other's personal style.

As he prepares for the daunting prospect of restoring ITV to its former glory, one of Allen's toughest tasks will be to handle the departure of Green with a sober and dignified touch.

Keeping a straight face while responding to questions about his old enemy's bloody demise will not be easy.

The City's big battalions have had their day. Green's head is on a stick. But it's too soon for shareholders to declare victory.

For if, as a result of this coup, the merger runs into difficulties, as it may well do, investors risk destroying much of the value that they had demanded Green and Allen to create.




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