Grade will have to leave BBC board meetings if Pinewood is on the agenda

Michael Grade, the newly appointed chairman of BBC governors, will be forced to absent himself from the boardroom if Pinewood Studios, which he also chairs, is discussed, it emerged yesterday.

Michael Grade, the newly appointed chairman of BBC governors, will be forced to absent himself from the boardroom if Pinewood Studios, which he also chairs, is discussed, it emerged yesterday.

Pauline Neville-Jones, the chairman of the audit committee of the governors, and Simon Milner, the secretary of the BBC, will work out the procedures required to tackle any perceived or real conflicts of interests between Mr Grade's two jobs. A spokeswoman for the BBC said: "We may also take advice from KPMG, our external auditors."

Although Mr Grade has described as "preposterous" the idea that Pinewood would ever be discussed by the governors, the BBC spokeswoman said procedures were being put in place in case it ever came up.

Pinewood is used to film a number of BBC programmes, including The Weakest Link.

"Where there is a potential for conflict, Michael Grade will remove himself from the discussion and the vice-chairman will take the chair," the spokeswoman said. Beyond the mechanical solution of Mr Grade leaving the room if Pinewood is ever discussed, the spokeswoman said the BBC would formulate a more sophisticated way of addressing any potential conflicts before Mr Grade joined on 17 May. "The details are not yet worked out but there are well established procedures and precedents at the BBC," she said.

The appointment has been welcomed from all corners of the industry and political spectrum. However, a number of figures have demanded that Mr Grade cut all ties with Pinewood. Don Foster, the Liberal Democrat spokesman on media issues, and Derek Wyatt, a Labour MP and member of the Selection Committee on Media, Culture and Sport, have called for Mr Grade to give up the Pinewood job and put his shares in the studios in a blind trust.

Separately, Mr Grade took part in a panel discussion at an event to launch a new broadband service from BT, where he declared that television broadcasters must embrace distribution via the internet. He said: "If I were a major content owner, I would be looking at what has happened to the music industry and I'd be very concerned. The lessons are you can't be arrogant enough to believe any of the distribution methods available are going to win out."

The BBC's huge investment in the internet has provoked complaints from its rivals. The Government has commissioned an investigation into the issue.