Superstars of the South Bank show

They used to have kickabouts at lunchtime, now the LWT old boys rule UK television. Chris Horrie reports

The speculation that Michael Grade is about to leave his unhappy berth at First Leisure to take Greg Dyke's vacated seat as the head of Pearson TV is the latest round of corporate musical chairs involving one of the most powerful and close-knit groups in British television: the former executives of London Weekend Television.

Every big broadcaster in the country, with the significant exception of BSkyB, is now either run by 1980s LWT alumni or their proteges. Sir John Birt, the outgoing BBC director-general; his successor Mr Dyke; BBC chairman Sir Christopher Bland and Mr Grade all worked at LWT's South Bank studio and office complex in the 1980s - as did ITV/Channel 3 network director Marcus Plantin, Barry Cox, now deputy chairman of Channel 4 and a clutch of senior executives at Pearson, part owners of Channel 5.

At the non-executive level ex-LWT persons are influential too, particularly in politics. They range from London mayoral candidate Trevor Phillips to Peter Mandelson, who once worked on LWT's now defunct flagship current affairs programme Weekend World. The network even stretches backwards - to St Catherine's College, Oxford, alma mater of Sir John and Mr Mandelson, where LWT likes to headhunt university recruits.

LWT in the 1980s was famous for its corporate culture. Executives were typically 10 or even 20 years younger than their counterparts at the BBC. John Birt and Greg Dyke were among the staffers who used to play football on Friday lunchtimes. One reason the LWT crowd are so influential now is that they reached senior execiutive level in their thirties or early forties.

The youth policy was, like much else at LWT, based on the US experience. The British system had been based on the BBC, with its rigid, civil service type career structure, where relatively low salaries were paid in return for a job for life and promotion on the basis of seniority.

LWT was the first to go the American way, introducing short-term contracts, job insecurity and big money for those who made the grade. By the mid- 1980s no less than 16 LWT executives had become millionaires. At the time the director-general of the BBC, Alastair Milne, was on pounds 70,000 a year.

The emphasis on youth folded neatly into another LWT characteristic - a love for the ideas of the "new left" in America and on the Continent. In the 1980s the Labour Party suffered a sort of intellectual death as the "old left" and the "old right" fought each other to a standstill. LWT became a refuge for younger, leftist intellectuals influenced by the 1960s American counter-culture. Many gathered around Weekend World.

The show itself was often awful as television (it was eventually axed by Mr Dyke because it could not get ratings). However it functioned as a think-tank where, under the influence of the erudite Atlanticist Peter Jay, cornerstones of New Labour thinking such the social market and globalisation were given their first airing by producers with a lot of time on their hands. Above all, there was an emphasis on the politics of gender and racial identity. Sir John lavished money on a minority programmes unit, which made the first programmes exclusively aimed at blacks, gays, lesbians and young people.

Politics and business went together. Sir John and Mr Grade were convinced that the British television market would follow America and fragment into niche audiences, especially with the arrival of satellite and cable. It therefore made sense to make programmes (which might one day grow into channels) catering for specific social groups.

Sir John revolutionised the way LWT did its market research, replacing crude measures of total audience size with focus groups designed to show how particular programmes had small but highly committed niche audiences: exactly what advertisers began to look for in the 1980s.

In the meantime, however, LWT still needed to gather a "traditional" mass audience. Once again Sir John turned to America - buying the format for Blind Date, which was to be a huge ratings success. In addition, Sir John and Mr Grade relied heavily on bought-in American movies.

Later, as head of Channel 4, Mr Grade balanced domestic shows like Countdown with made-for-export US shows like Friends and ER. In this way he played to both traditional mainstream UK audiences and to the niche of upmarket thirty-somethings.

At Pearson, Mr Dyke played the same game, becoming worldwide distributor for ferociously global products like Baywatch as well as filling Channel 5 with cheap American TV movies capable of generating the 5 per cent audience share required for profitability. Original British productions cost between 10 and 20 times as much as a bought-in US mini-series.

Sir John's attempt to impose LWT thinking at the BBC was less successful. More money than before went into minority arts and factual programmes. But with no niche advertisers to please, and few of the BBC's customers (the licence payers) watching, the commercial rationale was unclear. By the same token, the policy of buying in American product was out of the question at the BBC, unless he was prepared to destroy its drama and light- entertainment production base.

Under Sir John's leadership the BBC resorted to formulaic LWT-style popular programmes such as Pets Win Prizes (a fiasco created by the former LWT executive Andy Mayer, who worked on Nice Time at Granada with Sir John). The popular drama budget was slashed and what remained was diverted into projects like the bland soap El Dorado, located not in Eastenders' Walford, but in culturally neutral Spain. It was hoped that El Dorado would compete with similar American product in world markets. The project was a complete disaster.

Sir John then tried to revive the BBC tradition of costume dramas, with prestige projects such as Middlemarch, which were also made with an eye to foreign sales, riding on the voluminous petticoats of Merchant Ivory. But the heritage for export shows garnered only modest foreign sales, and received mixed ratings at home.

Sir John thus found himself in the catch-22 of the British television industry in an age of globalisation.

Vast revenues are potentially available for products which can be exported to the tens of thousands of channels coming on stream in every country in the world. But these markets demand the culturally neutral products that the American industry produces so well (MTV, The X-Files, Baywatch, and cop and hospital dramas).

The British system is geared to pleasing British audiences because, except for Sky, it needs mass audiences to justify the licence fee or satisfy advertisers.

That means producing programmes that are strongly British, or even regional - Eastenders, Casualty, Coronation Street, Birds of a Feather, and documentaries and "reality" shows about British social problems.

None of this is exportable. "Non-cultural" product, such as the BBC's natural history shows and costume dramas, are sold around the world, but they get mixed ratings at home.

Successes in bridging this gap hav been rare: Benny Hill (the jewel in the crown of Thames TV's back catalogue, now owned by Pearson) and Upstairs Downstairs (an LWT production).

The challenge for the LWT alumni, and therefore the British television industry, is to get the balance between production for the home market and export right.

At the BBC, Sir Christopher and Mr Dyke have already signalled that the first priority will be to secure the home market. At the other extreme, Pearson TV - under the ultimate management of the Texan Marjorie Scardino - has geared up to challenge for a place in the global market.

Can the LWT alumni successfully continue to pull off this balancing act - crucial if one of Britain's few world-class industries is to continue to thrive? Sir John never quite got his act together at the BBC partly because, when he pulled levers, nothing happened, or the organisation veered about wildly. He was also accused by Mr Grade, no less, of being over-eager to appease political masters who did not have the BBC's best interests at heart.

Now the BBC has another - perhaps final - shot at positioning itself in the global media market under Mr Dyke. Meanwhile, Pearson under Ms Scardino - and her deputy Mr Grade or perhaps an American import - could become a player. Then there's Channel 4 under Michael Jackson, whose meteoric rise at the BBC was sponsored by Sir John - perhaps because he recognised a man after his own heart.

Crucial to the game will be how all these channels position themselves in the bidding wars for top sports spectacles - immensely popular because they are virtually the only mainstream television left with authentically unscripted climaxes.

Crucial also will be how the British television industry positions itself for a new media age of infinite channels - digital and cable as well as terrestrial - and, beyond that, infinite connectivity of telly, computers, and the internet.

To date this story has played at home as a personality or media story. The reality is that it's a business story far more important for UK Plc than who owns what pubs or even who owns what heavy engineering assets.

SIR CHRISTOPHER BLAND

1984: Becomes chairman of LWT.

1994: Leaves LWT after Granada merger, taking pounds 9m. Takes over as chairman of National Freight and becomes a director of Nynex, large UK cable operator.

1996: Becomes chairman of BBC.

SIR JOHN BIRT

1971: LWT researcher.

1974: LWT head of current affairs, working closely with Michael Grade.

1981: Takes over from Grade as LWT director of programmes.

1987: Goes to BBC as deputy director-general.

1993: BBC director-general.

1999: Steps down as DG.

GREG DYKE

1982: Joins LWT as a researcher.

1983: Editor in chief, TV-am.

1984: TV South programmes chief.

1987: Returns to LWT as director of programmes, replacing John Birt. Rebuilds mass audience by programming football and distinctly British popular drama.

1989: Attends Harvard to prepare for becoming LWT managing director.

1991: Triumph as LWT retains its franchise at auction. Dyke says of Mrs Thatcher: "It's time we told the old bat what's what."

1992: Bitter recriminations against the BBC for helping Sky "snatch" Premier League football from ITV. Previously Dyke had tried to set up an ITV Premier League of 10 clubs.

1994: Granada buys LWT. Dyke scoops pounds 7m from sale of shares. Says the Conservatives have "wrecked" the TV industry. Announces he is leaving the industry "perhaps permanently".

1994: Joins Pearson as head of TV.

1998: Pearson sells stake in BSkyB for pounds 500m. As a director of Man Utd, opposed BSkyB takeover.

1999: Made director-general of BBC.

MICHAEL GRADE

1976: Director of programmes, LWT.

1981: Goes to US as president of Embassy Television: "Basically, my job was selling crap to arseholes."

1984: Controller of BBC 1 then managing director of BBC Television.

1987: Lures John Birt to the BBC as deputy director-general. But then falls out with him and leaves to become head of Channel Four.

1992: Furious attack on Birt for running down the BBC production base.

1997: Ttakes over at First Leisure.

1999: Tipped to take over from Dyke at Pearson TV.

OTHER LWT ALUMNI

Mike Southgate: former managing director of LWT, now head of UK operations at Pearson

Hugh Pile: head of 1991 LWT franchise bid for GMTV, now head of special operations at Pearson.

Tony Cohen: former financial director at LWT, now head of Pearson North America.

Barry Cox: former head of current affairs at LWT, now deputy chairman at Channel Four

Nick Elliot: former head of drama at LWT, now head of drama at ITV.

Marcus Plantin: former director of programmes at LWT, now network director at ITV.

Jane Hewland: ran minorities unit at LWT. Now, through Hewland International, big programme supplier to Sky.

Michael Atwell: producer of Gay Life at LWT, now head of factual programming at Channel 5.