Carnage expected as well-paid executives fight for their jobs

Telecoms fallout: C&W merger prompts BT challenge on entertainment services

Cable & Wireless Communications, the telecoms and cable television company that was created on Tuesday, is expected to have to set aside millions of pounds to pay off senior executives and other staff as it proceeds with the complicated merger of four distinct companies.

As many as 1,000 jobs could be at risk, cable analysts predicted last night, out of a total of about 12,000. Duplication at the top, particularly on the finance and marketing side, will mean expensive severance packages for several executives.

A search team has already been established and the group hopes to move quickly to make senior appointments. The process might take up to six months.

Chief executives in the cable industry earn about pounds 200,000 a year, including bonuses. Many US-born executives have been awarded lucrative housing allowances and other benefits, which will make redundancy packages even more expensive. When Alan Michels left Telewest, then the largest cable operator in the UK, earlier this year, he received a pay-off estimated at as high as pounds 1m.

Cable industry sources conceded yesterday that senior executives at Mercury and the three cable companies involved in the pounds 5bn merger - Nynex CableComms, Bell Cablemedia and Videotron - had launched an intense lobbying campaign for the limited number of key management positions on offer.

It emerged last night that a team of senior executives, led by Derek Burney, chairman of Bell Canada International, had been appointed to conduct a search for a chief executive as well as other senior managers. Also serving on the search committee are Stephen Pettit, an executive director of Cable & Wireless, and Fred Salerno, the chief executive of Nynex, the US parent of Nynex CableComms. The presence of Mr Pettit appears to put paid to expectations that he might be appointed to the top job at Cable & Wireless Communications.

Among the leading early contenders for chief executive are Peter Howell- Davies, who runs Mercury, and Dan Somers, chief executive of Bell Cablemedia and a former senior director of Bell Canada International. The two have had a long history, having helped forge the original merger of the cable interests of Bell and C&W, which gave birth to Bell Cablemedia. John Killian, the chief executive of Nynex CableComms, is also in with a chance, some insiders say, although he was kept out of negotiations between Nynex, the parent company, and Cable & Wireless until late in the talks.

"There is going to be carnage," said one senior cable executive. "There simply isn't room for everyone."

Meanwhile, the cable sector generally was poised for further consolidation, with Comcast, the unquoted cable company, the favoured target for takeover, probably by Telewest, which is eager to regain the initiative as the other leading cable grouping in the UK. Smaller players likely to be bought out include Telecential, Diamond and perhaps General Cable, controlled by the French utility, Societe Generale des Eaux.