Will the BBC pick an outsider?

The first shots have been fired as candidates to take over as BBC director-general take their positions.

If you want to be the next director-general of the BBC, you're too late. The first interviews began last week and, more importantly, at the weekend the first serious knocking copy about candidates started to appear. If no one has started knocking down your chances yet, it is probably too late to believe that the head-hunters are about to give you a call.

The process of shooting down the front-runner began in Saturday's Times with a piece meant to see off the chances of Greg Dyke, the cockney chairman of Pearson Television, and, significantly, the friend and supporter of the Prime Minister.

The Times revealed that Mr Dyke has made donations amounting to pounds 50,000 to the Labour Party over the past five years and implied that a cronyism scandal would erupt if he were to get the job. The BBC is planning a strongly worded letter to The Times protesting its independence from government. Despite the fact that we have government by control freaks, and that everyone from Alastair Campbell to Charlie Whelan has claimed in recent months that they can influence who gets the job, the BBC insists its governors do the selecting, not ministers.

The attack on Dyke was timed to coincide with the first interviews being held by the governors' selection panel. This panel of four comprises the chairman Sir Christopher Bland, the vice-chairman Baroness Young, one of the three regional governors who represent Scotland, Northern Ireland or Wales, and one of the governors with a financial background - probably Sir David Scholey, who is an adviser to the merchant bank Warburg.

For a neat rebuttal to allegations of Labour cronyism it wouldn't hurt if it also includes the governor Dame Pauline Neville-Jones, a former senior civil servant at the Foreign Office under successive Tory foreign secretaries.

The governors' selection panel will be interviewing those who have reached them through head-hunters employed by the BBC for the first time. The use of head-hunters is noteworthy in itself.

First, it means the BBC has caught up with modern business practice and realises it is inappropriate for a personnel director to be responsible for the selection of their future boss. It is also an attempt to achieve greater accountability. This accounts for the placing of a job ad in a number of newspapers.

But, importantly, it is also a mark of the very strong field of candidates who this time come from outside the BBC. Not in living memory have the internal candidates had such a serious chance of losing to an outsider.

Once the selection committee has whittled the applicants down to a manageable few, all-day interviews will be held in front of all 12 governors. Almost certain to get to this stage are the front-runners Dyke, Alan Yentob, director of BBC Television, and Mark Byford, chief executive of BBC World Service.

At this stage the BBC's love of continuity may become a more powerful force than anything that can be wielded by the Labour Party.

When Birt succeeded Michael Checkland in 1992 he had been deputy director- general for five years and had no serious competition. In 1987, Checkland himself was deputy to the ousted Alasdair Milne, and so he defeated more glittering names such as Michael Grade, Jeremy Isaacs and Jonathan Dimbleby. Checkland succeeded because he raised the fewest objections from the largest number of governors. So it is here that Dyke's high-profile career outside the BBC may play against him, and into the hands of much more low-key candidates such as Byford.

The problem in forecasting the identity of the new director-general is that there seems to be no coherent strategy coming from the governors about what they see as being the BBC's future.

A commitment to the licence fee is about all they have been prepared to support publicly. As a result, David Elstein, chief executive of Channel 5 and a long-odds outsider for the post, has had to switch from opposing the licence fee to supporting its retention.

One skill that everyone agrees the next director-general ought to have is that of communication. Even Birt's admirers admit he alienated large numbers of BBC staff, not just because of his job cuts and casualisation of the workforce, but because of his penchant for management speak, which grated on an organisation proud of its creativity. Quite simply, he never communicated what he was trying to do. This should be a strike in favour of Greg Dyke, a man who has presented television programmes and is an acknowledged charmer.

Given the state of the BBC's finances, the other thing the corporation needs is a commercial mind. Birt has done the hatchet-man job, cutting out the fat, or, as he puts it, "making efficiency savings" that have funded the BBC, while the licence fee has been increasing at less than the rate of inflation. But that stage has been done; in the private sector the next stage would be expansion and investment.

Assuming that the Government's task force on BBC funding headed by Gavyn Davies is just another way of letting the BBC down easily, and huge increases in licence-fee income are not about to flow towards the BBC, the next director-general may have to be someone who knows how to exploit the BBC brand more successfully. This is why a coalition of commercial broadcasters, from BSkyB's Mark Booth to Kelvin MacKenzie at Talk Radio, and ITV have recently been lobbying to reign in the BBC's commercial activities.

They know the BBC has a fantastic brand that has so far been under-exploited. Birt realised too late that he had made billionaires of American broadcasters such as Discovery, which had used BBC programmes to build their businesses.

Now the BBC has started to launch global commercial networks in which it has a stake. It is talking about exploiting its news resources by publishing an international magazine to rival Time and Newsweek. It has put in place plans to double the amount of money it makes from spin-off toy sales.

All this activity worries not only those who fear the BBC as a competitor, but also those who consume its domestic fare and worry about its cutting its programme cloth to suit commercial needs.

But either the next director-general can win the battle for an enhanced licence fee - perhaps through a supplement of the licence fee for digital decoders - or they have the experience to expand the BBC's revenues from commercial activity.

Greg Dyke's connections with the Government could be seen as an ideal qualification for both battles.

Yet, internally, senior BBC executives are keen to remind outsiders that the director-general's job is one of two halves: one half chief executive and one half editor-in-chief. Greg Dyke, who moved into management after only a few years as a journalist, will find his future will depend less on the Tory press and more on how badly the governors feel they need an editor-in-chief.