Green rejected as ITV chairman

The crisis at ITV came to a head today as Carlton's Michael Green was forced out as its new chairman, after the board of merger partner Granada refused to come out in support of him.

It means that ITV, which only received government clearance for the merger two weeks ago, needs to find a new head. It could also leave one or both the ITV companies vulnerable to a foreign takeover.

City institutional shareholders had set a deadline of noon today for the £4.6 billion merged ITV to come up with a new chairman-elect from outside either Carlton or Granada.

It emerged this morning that Granada's directors, at a late-night meeting on the South Bank, caved in to institutional shareholders and decided that a new chairman must be found.

In a statement Granada said: "The board of Granada recognises that this is a matter of corporate governance and, furthermore, is determined that ITV plc should go forward with the full support of its shareholders; moreover, Granada is concerned that the present uncertainty should be removed as swiftly as possible.

"Accordingly, the board of Granada has given careful consideration to the views of shareholders and decided that their interests will be best served by the appointment of a new chairman from outside the enlarged ITV plc."

Granada's chief executive, Charles Allen, will still go ahead as chief executive of the enlarged ITV.

That leaves Mr Green, 55, who founded Carlton more than 20 years ago, without a serious role in the new business and puts Granada - the larger of the two ITV companies - firmly in the driving seat.

Carlton's board of directors had come out in unanimous support of Mr Green after a crisis meeting on Sunday night.

Its senior director, Sir Brian Pitman, said: "This is not about individuals, this is about the role of a well-respected group of non-executive directors to determine what is in the best interests of a company and its shareholders as a whole."

Mr Green can expect to be paid at least one-year's salary, which last year was just over £700,000, and he has already built up a pension pot which will pay him at least £134,000 a year. Mr Green also owns just over two million shares in Carlton, worth £4.5 million.

The crisis is unprecedented in the City, calling into question who actually runs British industry; the directors and executives of companies or the powerful institutional fund managers who look after billions of pounds of insurance and pension fund money.

The merger had been heralded by both Carlton and Granada as a way to boost investment in quality programmes. Carlton owns the London weekday franchise and Granada runs the weekend franchise.