Grade quits BBC for ITV

Departure dampens bid for license fee increase

ITV is set to announce today that it has hired BBC chairman Michael Grade for the newly created post of executive chairman beginning Jan. 1, a move that is causing anger and turmoil at the BBC and in political circles, sources said late Monday.

The move comes as Grade and BBC director general Mark Thompson appear to be losing a protracted battle with the government to seek an increased license fee to pay for an array of new digital services. Grade's departure at this critical point will further jeopardize that process, and with it the BBC's future digital strategy.

"The timing of Michael Grade's departure to ITV could hardly be worse for the BBC," BBC business editor Robert Peston said on BBC news. "As one member of the BBC board of governors put it to me, it's a mess."

Grade will take over the day-to-day running of troubled commercial broadcaster ITV and will replace current ITV chairman Peter Burt, sources said. The move, news of which broke late Monday, is a huge coup for the ITV board, which had appeared to struggle with the recruitment of a CEO to replace Charles Allen, who quit in the summer.

Grade will swap a salary of ?140,000 ($271,425) a year earned as a part-time chairman for a package believed to be well into seven figures as combined chairman and CEO of the commercial broadcaster.

ITV declined comment Monday night, but senior executives were said to be "absolutely delighted" at securing Grade, a seasoned programmer and business player capable of restoring confidence in ITV in financial circles.

"He's hugely charismatic and has been head of BBC1 and chief executive of Channel 4, so there is great excitement," one source said.

The first response of many senior figures in the broadcasting industry here likely will be shock. Former Ofcom CEO Stephen Carter, former Channel 4 CEO Michael Jackson and film executive Stewart Till were thought to be on the short list for the post, and Grade had never figured in any of the speculation about taking over ITV.

ITV is expected to announce the move formally to the stock exchange this morning, but in a highly unusual move, the BBC pre-empted the formal notice by confirming the move just after midnight Monday.

"We will respond to any formal announcement (today)," the BBC said. "Clearly this is a surprise, especially at this moment. For the last 2 1/2 years, Michael Grade has been a great chairman, who along with the director general Mark Thompson has achieved a successful charter settlement for the BBC. The future system of governance, secured by Michael, will strengthen the BBC's accountability to its audiences. We wish Michael well."

Inside accounts at the BBC paint a different picture, however, with reports carried by Sky News suggesting that BBC top brass were "incandescent with rage" at Grade's defection, which comes as the pubcaster's complex license-fee negotiations are far from concluded.

News reports from politicians in Westminster suggested that several members of the House of Commons culture and media select committee had branded the move "disloyal."

Grade joined the BBC with a mission to stabilize the pubcaster 2 1/2 years ago when his predecessor, Gavyn Davies, and former director general Greg Dyke were forced to resign in the wake of the Hutton Inquiry that examined the BBC's controversial 2003 report on Iraq's military capabilities.

Culture Secretary Tessa Jowell, who hired Grade as BBC chairman and backed his call for a significant hike in BBC income in a showdown with the Treasury, could not be reached for comment.

As executive chairman of ITV, Grade will be expected to set a new strategic vision for the broadcaster, whose loss of audience share and advertising revenue has outpaced other commercial broadcasters here.

Grade also will be expected to invigorate programming and secure the confidence of investors, including British Sky Broadcasting, which this month took a 17.9% stake in the broadcaster.