Grade move gives ITV respite from frenzy of takeover talk

City welcomes appointment of former BBC chairman. Shares fall as bid speculation fades
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Any remaining hopes that ITV would succumb to a takeover bid were buried by the news that the company had been able to hire the highly regarded Michael Grade to run it, analysts and investors said.

While Mr Grade's appointment was fulsomely welcomed in the industry and the City, ITV shares ended the day down, as those bid hopes faded.

Paul Richards, an analyst at Numis Securities, said: "It would be grossly unfair for shareholders to install someone of the calibre of Michael Grade and then accept a bid. It is only right that he be given breathing space to turn ITV around."

NTL, the cable group, made an offer this month which was rebuffed. It was thought that the German television group RTL or private equity buyers might also pounce. With its poor performance and poorly regarded leadership, ITV had long been considered vulnerable to a takeover.

Roger Parry, the chairman of Johnston Press, who himself had wanted the ITV job, said: "He [Mr Grade] is a fantastically inspirational guy. The whole point of a guy like him is that it is a talent magnate. ITV is now in a very strong position to implement a creative renaissance."

As well as the shock news that it had hired Mr Grade from the BBC to work as executive chairman, ITV also announced that John Cresswell, the finance director who had been acting as interim chief executive, would become chief operating officer. No chief executive will be hired for at least two years.

Industry insiders suggested that although Mr Grade was a talented executive, he was not a "details man" - an area that would be handled by Mr Cresswell. Sources also said that investors had demanded a change of chairman at ITV, even though the broadcaster was officially only looking for a chief executive after Charles Allen resigned in August. Sir Peter Burt's record in the job has been widely criticised and he had privately admitted he no longer wanted the role.

ITV admitted that Mr Grade's job, combining the chairman and chief executive roles, was against "best practice" codes of corporate governance. However, it said it had the support of its major institutional shareholders and that the chairmanship would return to the traditional non-executive status within three years.

The company also reported that it had suspended its share buy-back programme, having spent £251m of the £500m earmarked. It is now expected to invest this money in its programming budget and, possibly, on internet acquisitions.

The BBC has been a fierce competitor for viewers in recent years and analysts said that another attractive aspect to the Grade appointment was that it left the corporation in "disarray".

Steve Liechti, of Investec Securities, said: "For once, ITV has stolen a march on its competitors and taken a step that will both surprise and please the City... He will bring both commercial and 'political' experience to bear at ITV. Moreover, we believe his departure will for a time at least transfer industry concerns from ITV to the BBC, perhaps providing at least some respite for ITV."

It is understood that BSkyB, which suddenly emerged this month as ITV's biggest shareholder, views the appointment as a good one. Mr Grade insisted that Sky would be treated just like any other shareholder.

"There is no question of any special treatment for any shareholder. If Sky has a proposal and it benefits the company and all shareholders, we'd listen. If it just suits Sky, we wouldn't countenance it," he said.

Mr Grade said his first task was to stabilise ITV and it was already showing signs of that with the response to its autumn programming. "ITV needs a period of stability and staying out of the limelight. I hope for success as fast as possible but it always takes longer than you think," Mr Grade said.

He gave his backing to the programming-making team at ITV, which is led by director of television Simon Shaps.

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