Green's £15m could cost ITV far more

Charles Allen, the chief executive of ITV, is understood to be fuming over the £15m payout to Michael Green, the former Carlton Communications chief - fearing it could harm the TV group's case for cutting the £475m a year it pays the Government.

ITV is putting in a submission to Ofcom, the media regulator, about the amount it pays in regulatory licence costs and to cover the use of the "spectrum" available for terrestrial TV channels.

Currently, ITV pays about £200m a year for use of the spectrum and another £275m in levies and compliance costs to cover its public service broadcasting obligations.

Ofcom has just finished one consultation about the licence arrangements and is starting another about the spectrum costs.

In a paper last week it valued the national licences held by ITV, Channel Five, BBC1 and BBC2 at about £88m a year. Currently, the BBC pays nothing and Channel Five about £25m a year. Channel 4, which has different arrangement, also pays nothing.

ITV is expected to argue that even this £88m is too high, citing a previous government paper that valued the spectrum licences at £10m to £15m a year. The Ofcom figure is based on replacing the spectrum by transmitting via cable or satellite. However, ITV will point out that with digital terrestrial TV, broadcasting costs have come down substantially.

Senior executives at ITV are concerned that the fat-cat row over the payoffs to Mr Green and two other former executives of Carlton, who lost their jobs when the group merged with Granada to form ITV, will weaken the arguments for a cut in the fees.

Mr Green received £15m while the former Carlton finance director, Paul Murray, got £7.3m and the company secretary, David Abdoo, £5m.

These all came from a share option scheme. The non-executives of Carlton decided that the merger meant that all the conditions of the scheme had been met, so it paid out in full.

Angry shareholders say that up to half the payments could have been withheld. They are meeting with Sir Brian Pitman, who was chairman of Carlton's remuneration committee, on Wednesday.

Mr Green has re-emerged leading a £300m bid for UCI cinemas in league with the Reuben brothers. His is one of six offers for the company shortlisted in an auction.