Will Morrison be sacrificed for Granada's fall?

ONE can hear the knives being sharpened. Granada shares have performed like a dog over the past two years, halving from their peak.

The company won few friends in the City for the amount of money it chucked away on ITV Digital. It has also made many enemies outside the City for the way it and Carlton finally pulled the plug.

Hence, it is said, Something Must Be Done. There needs to be a sacrifice at the top of Granada.

Now try to spot the likely victim. Certainly, Charles Allen, the executive chairman, is under pressure. But late last week, the chatter in medialand suggested that well before Allen shuffles off the scene we may see the departure of chief executive Steve Morrison - perhaps as early as Granada's interim results at the end of the month.

Morrison is one of TV's great survivors. He was chief executive of Granada's production arm for years, and a very successful one at that. But as chief executive of the whole shebang when it was going through difficult times? Well, he hasn't quite cut the mustard. That is the line being pushed by those who believe that Morrison is on the way out.

Unfair? Maybe. But life at the top in business is rarely fair. And in any case, even if Morrison is forced to quit the chief executive's post, he could probably be found something with reasonable status (and no doubt pay) so the move need not appear too great a humiliation.

A further point: had the merger of Carlton and Granada proposed earlier this year gone ahead, there probably wouldn't have been a longterm role for Morrison. Carlton chairman Michael Green would have become chairman of the merged group, Allen would have been chief executive. Neither Gerry Murphy at Carlton nor Morrison would have stayed on.

When the City goes through one of its periodic bouts of calling for sacrifices, it is usually right to pause and reflect before joining the cry for the axe to be wielded. But if it is decided that Morrison is to go, then at least there is every chance for his departure to be engineered so it can be done with some dignity.

Endowment panic
ANOTHER week, another warning about endowments. Millions of us risk finding ourselves in the position where endowment policies will fail to pay off our mortgages. And the news - if news is the right word for what amounts to an updated warning - has provoked strikingly divergent responses.

In one corner we have those who say it is extraordinary and outrageous that life companies sold us investments that have managed to perform so lamentably while, the past couple of years notwithstanding, the stock market has gone up, up, up.

Yes, the indices may be down by 20 per cent-plus from their peaks at the start of 2000. But just look at their performance in previous years: share prices are still more than double their level a decade ago.

Then, in the opposing camp, we have those whose message to disgruntled investors is simple and blunt: Tough. You chose to take out an endowment policy because you thought there was a good chance that your policy would do more than pay off your mortgage.

There was also a good chance that it would give you a useful surplus at the end of the period. You took a gamble but that gamble hasn't paid off, hence your house may not be completely paid for. Unfortunate and uncomfortable, but it's the price of having taken a punt on the stock market rather than going for a repayment mortgage.

Both views are extreme. But before rushing to join one camp or the other, bear a few things in mind. Some endowment mortgages were undoubtedly mis-sold.

Talk to anyone who sought a straight repayment mortgage in the mid-Eighties and listen to how the person behind the building society counter tried to argue with them that an endowment was better. Risks were rarely spelled out. Furthermore, no one now seriously denies that endowment policies are confusing and opaque.

But set these issues aside for a moment and just look at how endowments have performed. Research by my colleague Stephen Womack shows that your endowment's performance hasn't been as appalling as you might think. Imagine a 29-year-old man taking out a £50-a-month policy 15 years ago. On maturity today, a policy with a large life office would typically be worth between £16,700 and £21,400.

And what if that same man bought life insurance out of his monthly £50 then invested the rest in the FTSE? Allowing one% a year in management charges, the investment would now be worth £18,213. The stock market's fall since January 2000 has taken a nasty toll.

So before you scream that you have been ripped off by your endowment provider, let this sink in.Your policy may not have sparkled. Neither has it been disastrous.