How commercial broadcaster poached the man from Auntie

It was at Dukes Hotel in Mayfair, in the heart of London's clubland, that ITV's chairman, Sir Peter Burt, first sounded out his opposite number at the BBC, Michael Grade, about joining the commercial broadcaster.

Over a breakfast in September, arranged as one of a regular series of meetings between the heads of the country's two biggest public service broadcasters, Sir Peter floated the possibility of a remarkable industry transfer.

Sir Peter, a career banker, was already embarked on a search for a chief executive at ITV, after Charles Allen's resignation in August. Many of the candidates that ITV was considering were not from the television industry. Sir Peter told Mr Grade it would be difficult for the company to be run by two people from outside the sector and then "floated" the idea that Mr Grade might succeed him as non-executive chairman - a part-time supervisory role.

Mr Grade responded that he had a job still to do at the BBC and that he could not leave before the BBC's licence fee negotiations were completed. The matter was then dropped as ITV continued its search for a chief executive.

The press speculated incessantly but Mr Grade's name did not even enter into the frame. He already had a major job in broadcasting and, at 63, he was a lot older than the names that were being hotly tipped. It was written, with near certainty, that Stephen Carter, the former chief executive of the media regulator Ofcom, would get the job.

However, the problem ITV encountered was that the candidates were either good business figures or experienced media executives, with few able to combine both sets of skills. ITV was also after a "big name" who could inspire staff. Mr Grade fitted the bill perfectly.

This month, a further approach was made to Mr Grade and more conversations ensued. Sir George Russell, ITV's deputy chairman, and former deputy chairman of Channel 4 when it hired Mr Grade as chief executive back in 1987, was to play a pivotal role in recruiting Mr Grade once more.

This time the offer to Mr Grade was for a bigger role and it was made in much more specific terms. He would be full-time executive chairman, replacing both Sir Peter and Charles Allen. It was an opportunity to get back to hands-on programming that Mr Grade could not resist, even though those BBC licence fee negotiations had not been completed. And the ITV job offered financial rewards on a different scale than those at the BBC - he is expected to make some £8m over the next three years at ITV.

On Monday last week, Mr Grade met the ITV board to discuss the position. Still, nothing final was decided and Mr Grade went away to sleep on it overnight. The next day, he was sure he wanted it, leading to final negotiations.

A contract with Mr Grade was signed at 4.31pm on Monday afternoon, but, as they could not risk him being spotted in an ITV building, the business was discreetly done at the offices of the company's bankers, Lazards. The news leaked late on Monday night, stunning staff at the BBC and ITV. Mr Grade's CV is just about perfect for ITV's purposes. He knows how to handle precious television stars - his first job was as a showbusiness agent. He has worked his way up the ITV hierarchy in the past and he has had a series of big roles at the BBC, including director of television.

He served for nine years as chief executive of Channel 4. Two years ago, he went back to the BBC, to preside over a renewal of the corporation about the David Kelly affair. Mr Grade has also held a series of positions in the business world, including heading the bingo hall and health club company First Leisure. For ITV, as far back as September, he was the best man for a big job.

His departing e-mail to staff: 'Look after Auntie... and thank you'

"Dear friends and colleagues. A short while ago, an announcement was made to the Stock Exchange about my appointment to ITV. It contains some bare facts which disguise what has been a huge personal decision for me; namely, to leave the BBC.

Firstly, I would like everyone to understand this is a career decision. What it is NOT is a reaction to anything, internal or external. I was faced with the choice of getting back into programming or 'governing' the BBC from a distance.

Those of you who know me will understand just what an effort of will it has taken for me, as chairman of the governors, not to look at the overnight ratings every day, not to engage in idle programming chit-chat with the brilliant creatives who are currently taking BBC television, radio and online to new heights of quality - and so on.

Looking back over the past two-and-a-half years, I can say I have never felt so privileged, never felt such a responsibility, and never felt so proud. Being chairman of the BBC was the most unexpected job I have ever had...

So much has been accomplished in the last two-and-a- half years that I feel comfortable that I have achieved what I set out to achieve - namely, restore the equilibrium of the this great institution, to lead the process to appoint a new DG, to secure a new 10-year charter and to reform the governance of the corporation.

With the help of my fellow governors and the new governance unit, the future is secure, the independence of the BBC is safeguarded and, most important of all, our programmes across all media are maintaining the overwhelming support of the licence fee-payers.

ITV is a competitor to the BBC, yes. BUT the BBC does need ITV to be strong, both for competitive reasons and to maintain the balance of power within British public service broadcasting.

I leave with some sadness because of all the friends, old and new, who have been my support over the past two-and-a-half years.

What I won't miss is the BBC sandwiches at meetings. They have taken recycling to new heights. But I digress.

In a speech I made when I was CEO at Channel 4, I included the words, 'It's the BBC that keeps the rest of the industry honest.' That is as true today as it ever was.

I am off to a new challenge, maybe at 63 my last real job, and hopefully give you a run for your money. That's how it should be.

Look after Auntie, I am sure you won't need me again. And thank you for having me.

Yours ever,

Michael Grade