Questions over the Programme at ITV; CITY COMMENT

Article excerpt

Byline: ANTHONY HILTON

WHEN a famous French diplomat of the 19th century died unexpectedly, his long-term bitter rival, on hearing the news, was reputed to have remarked: "I wonder what he means by that."

One feels rather the same when reading that Charles Allen, the head of ITV, is considering giving up his job at the ripe young age of 49. The story added that he was not available for comment - which, if true, must be the first time ever.

So what is going on? It is a rule of thumb in journalism that when someone is not available for comment, it is because they or someone close to them is in fact the source, and this is a crude attempt to cover their tracks. So is Allen the source?

If so, is it because he is all too aware that his performance at ITV is lamentable and he is therefore trying to wrong-foot his opponents by suggesting - Tony Blair-like - that he is on the brink of going anyway as a means of making enemies think it not worthwhile to plot to oust him?

Or could it be chairman Sir Peter Burt flying a kite to see if the suggestion creates a clamour for Allen to stay, or relief that he might be going - a rough and ready poll of investor sentiment?

In fact, there are two questions facing ITV. First, does it have a role in the changing media world?

Second, is Allen the man to lead it?

The answer to both may be no.

The answer to the second certainly is.

The horizontal model falls flat

IT is an article of faith in London that when it comes to the plumbing on which the securities industry depends, the best choice would be to have a variety of competitive markets where equities can be bought and sold.

These multiple platforms would then link into one central clearing house where all Europe's trades would be cleared for payment, and instructions dispatched for their settlement.

This is known as the horizontal model. Having one central clearing house appeals to the investment banks, which are the industry's major customers, because such a structure would allow them to net off trading positions in different markets and thereby minimise their risks and the amount of regulatory capital they need to hold as security against those risks.

There is an alternative, vertical model that exists in Germany.

There, all trades on Deutsche Borse and on Eurex go through the inhouse captive clearing and settlement system. The markets' owners thereby capture all the value of the transaction and this sets them at odds with their customers, who sometimes feel clearing costs are too high and who are generally uneasy about the lack of choice and the opportunity for monopoly pricing. …

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