ITV will have to "reboot" its long-running search for a new chief executive, after the group pulled out of talks with the favourite, Tony Ball, yesterday.
The broadcasting group added that the executive chairman, Michael Grade, would leave by the end of the year.
ITV's nominations committee met on Thursday evening, before releasing a statement saying that it had "terminated its discussions with Tony Ball". It said: "The process of negotiation and discussion has highlighted a number of substantial differences."
The differences centred on pay and Mr Ball's demand for a veto over the choice of chairman to replace Mr Grade.
One media expert said: "This makes the position quite fragile, and it leaves a degree of uncertainty around the group. ITV needs to move quickly. The market is changing around it and it needs a leader."
An ITV insider said the recruitment process "needs to be rebooted," adding that the appointment process had seen "machination after machination".
Mr Ball wanted a pay packet – including basic pay, bonus, long-term incentive package and pension – of £42m over five years. It is understood that ITV were prepared to offer a package worth £25m, but the former Sky head was unwilling to budge far enough. "Even in the headiest days, £42m would have been a substantial amount for the chief executive of a mid-FTSE 250 company," one industry source said.
ITV also rejected Mr Ball's demand to veto the choice of chairman.
Michael Grade surprised the market in April when he announced he would step down as executive chairman earlier than expected to move to the non-executive equivalent when a replacement was found. He will now leave the group entirely. The board said yesterday: "During the chief executive search process, it was agreed between the committee and Michael Grade that whatever the outcome, he would stand down as chairman."
The search for his replacement is "well advanced and discussions are ongoing with a number of external candidates. The committee is confident of appointing a new non-executive chairman in the near future." Insiders expect the appointment of a new chairman in the next few weeks.
The headhunter Russell Reynolds is running the search for a chief executive, and is overseeing the search for a new chairman. Sir Crispin Davis, former head of Reed Elsevier, is understood to be among the frontrunners. ITV said: "The first task of the new chairman will be to appoint a chief executive."
The broadcasting group settled on Mr Ball after the first choice, Simon Fox, head of HMV, ruled himself out.
The bookmaker Paddy Power installed the chief operating officer, John Cresswell, as the favourite in the process it called the "seemingly endless race". Mr Cresswell was understood to be ready to quit if Mr Ball was appointed.
Other strong candidates include Pascal Cagni, head of Apple in Europe, and Peter Fincham, ITV's director of television.
Numis analysts said: "The new chairman must now begin the search for a new chief executive which might take quite a lot of time. In the meantime ITV is likely to continue to look for savings in programme costs and to hope the television advertising market is not down too much in 2010."Reuse content