Friction, explosive rows and humiliation at ONdigital

News Analysis: Conflict is said to have set Stephen Grabiner on the road to eVentures but ambition may have helped

THIS IS the story of how Stephen Grabiner came to quit as chief executive of ONdigital after just 18 months in the hot seat at Britain's newest pay-TV company.

Widely regarded as one of Britain's most promising young media executives, Mr Grabiner was recruited to the post by Michael Green, chairman of ONdigital and also of its 50 per cent shareholder, the television and film-processing company, Carlton.

An autocratic operator, Mr Green runs his companies like a personal fiefdom, micro-managing their affairs down to the finest detail. Some find him difficult, even impossible to work with. Friction was almost inevitable and from the start Mr Grabiner began to feel bullied and sometimes humiliated by Mr Green's attitude.

Insiders talk of some increasingly explosive rows between Mr Grabiner and his chairman. On one occasion, at a media seminar in the City, Mr Green was seen publicly to reprimand Mr Grabiner, using strong language, after he dropped a seemingly harmless faux pas.

Mr Grabiner had been extolling ONdigital's virtues to investors and wound up by urging his audience "to get out there and buy those dishes". ONdigital does not require a dish to receive its stations, and indeed has made a virtue out of this supposed advantage over its main rival BSkyB. The audience generally took this clanger in good spirit, but Mr Green didn't see it in the same way.

In another episode Mr Green lambasted Mr Grabiner in front of his employees for poor set-top box sales. "We're giving the ****ing things away free," he shouted, "And still you can't shift them." In fact, supply problems have been a big constraint on subscriber growth.

By this stage it was plain to all at ONdigital that there was grief between the two. Mr Grabiner's disgust at his treatment was matched only by Mr Green's lack of regard for Mr Grabiner's abilities. "The thing that most pissed Michael off about Grabby's departure," says one insider, "is that he managed to resign before Green could fire him."

By the time the call came from Mark Booth, head of Rupert Murdoch's new Internet venture capital arm, eVentures, Mr Grabiner was desperate for an exit.

Mr Booth, until recently chief executive of ONdigital's rival, BSkyB, offered him the top job in developing the venture capital business in Britain, together with a mouth-watering cut of the action.

Management remuneration had been another cause of friction between Mr Grabiner and Mr Green. It is understood that Mr Grabiner's personal stake in the IPO planned for ONdigital some two years hence was to have been 0.6 per cent - which if the flotation achieves its expected value of about pounds 1bn, would be worth pounds 6m. Mr Grabiner regarded this as too small. The eVentures package is potentially worth two or three times that and the pay-back time could be faster.

Mr Grabiner, 40, is from a closely knit Jewish family of high achievers and this may have further fuelled his desire for rapid advancement. His brother Mike Grabiner has already amassed a large fortune as chief executive of Energis, the fast growing telecoms group. Another relation, Anthony Grabiner, is one of Britain's leading QC's.

"You should never underestimate the sibling pressure to outdo his brothers with Stephen", said one friend. "It rankles with him that he's not yet worth as much as Mike. The Murdoch package promises to get him there a lot faster than ONdigital."

Most media experts say that Mr Grabiner did a good job in his brief spell in charge of ONdigital. It has built a solid base of 250,000 subscribers - the top end of expectations - against Sky Digital's 1 million. As one media observer says: "I can't imagine they [ONdigital] are unhappy about the way the business has gone, but the slog to 1.5 million to 2 million subscribers will be long and difficult."

Insiders say that another cause of discontent for Mr Grabiner might have been his feeling that Carlton and Granada, the joint venture partners which own ONdigital were penny pinching a little.

One expert says: "When they made the decision to give the set-top boxes away Mr Grabiner felt that Carlton and Granada were looking to cut the marketing expenditure. Grabiner thought that if they were going to go for it they should go the whole way, not cut corners."

Some say Mr Grabiner may have under-estimated the difficulty of working for Mr Michael Green. He has a tendency to choose difficult bosses with a CV of employers that includes Conrad Black at The Daily Telegraph, Lord Hollick at United News and Media, Michael Green at Carlton and now Rupert Murdoch. Having worked for a tough bunch he may have thought he could handle the Green management style.

But others who have worked for Mr Green say it can be a frustrating and humiliating experience.

"It was a nightmare from the moment I walked in," says one former executive. "Before I joined he was completely charming, as he can be. But the moment he is paying your mortgage he lets you know."

The executive described the experience as "erratic, emotional and demeaning" including "being shouted at for small things, often in front of secretaries". He concluded: "He can be friendly and I don't even dislike him. But I would never work for him again and would never recommend anyone else to either."

But other media observers point to several members of the board that have worked at Carlton for years, indicating that not everyone finds Mr Green impossible. Bernard Cragg, the finance director, has worked there for 15 years. Nigel Walmsley has been there for more than 10 years.

Carlton points to its list of non-executive directors, which includes Sir Brian Pitman of Lloyds TSB and Sir Sydney Lipworth, as evidence that its board is not full of patsies.

One Carlton insider says: "To blame all this on Michael is a bit unfair. I think it is closer to the truth that Stephen saw a chance to make some big money on an Internet venture, like his brother, and wanted to take it."