New ITV chief Grade vows to give BBC 'a run for its money'

Michael Grade promised to give his old employer, the BBC, "a run for its money" after receiving a euphoric welcome from assembled ITV staff at the company's Gray's Inn Road headquarters.

Mr Grade's appointment as executive chairman has been celebrated as a coup by ITV's management, which has been seeking to fill the position since August, when Charles Allen resigned.

The channel has recently shed viewers at an alarming rate, fighting a losing battle with the BBC which, during the period of Mr Grade's chairmanship, has enjoyed greater popular appeal with its programming.

The new head of ITV said he would devote his energy to competing with his former employer "creatively, for the affections of the viewers". He said: "Competition has been missing. A strong BBC is good for ITV and a strong ITV is good for the BBC."

Although he admitted he hadnot watched much ITV recently, after some hesitation he named Prime Suspect and The X-Factor as two shows he had seen. Mr Grade, 63, said the ITV role was an opportunity for his "last real job" and would restore him to the front line of programming.

Amid widespread gloom at the BBC, there was speculation that Mr Grade's departure will increase pressure on the corporation to settle its dispute with the Government over the cost of the licence fee. Ministers suggested yesterday a quick agreement might be in the BBC's best interests in case Mr Grade used his new position at head of its main rival to provide ammunition against the BBC's bid for an inflation-plus increase in the licence fee, currently £131.50 a year.

Tony Blair and Gordon Brown want the fee to rise by 1 per cent less than inflation to force the BBC to cut its costs, while the corporation is seeking 1.8 per cent on top of inflation to help fund the switchover to digital.

ITV opposes a big rise in the fee and one government source said: "Grade will know where there is waste and inefficiency at the BBC and that could help ITV lobby against the BBC's demand. He could be a poacher turned gamekeeper. There is no sign of an agreement but the BBC would be well advised to get a move on."

In a letter explaining his decision to BBC colleagues, Mr Grade said: "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, 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".

The ITV job will carry rich rewards. The new executive chairman is likely to collect more than £2m a year, once bonuses and share options are added to a basic salary of £825,000. That compares with an annual salary of £140,000 at the BBC.

Mr Grade said his mission was "to get ITV to be the most watched, most lovable and most talked-about" broadcaster in Britain once again. He suggested he may put the main evening news on ITV back to a prime slot.

He also spoke of the "emotional" pull of ITV for him personally. His late uncle Lew Grade was among the founders of the network in 1955 and Michael Grade got his first job in television there, in 1973 when he joined London Weekend Television where he rose to become director of programming .

The favourites to succeed at the BBC

David Puttnam

The Chariots of Fire producer is a former head of Columbia Pictures. He has chaired the National Film and Television School and is UK president of Unicef. The Labour peer chaired the joint scrutiny committee on the Communications Bill.

ODDS: 3/1 favourite

Chitra Bharucha

Vice-chairman of the BBC Trust, she becomes acting chairman of the BBC in January. The Indian-born haematologist is a surprise contender to take the post permanently.

William Hill odds are 25/1 for Greg Dyke but its book does not include Ms Bharucha.

David Dimbleby

Synonymous with the BBC, he has aspired to be chairman but was narrowly rejected. The Question Time host has been the face of the BBC at almost every major broadcasting occasion, including the funeral of Diana, Princess of Wales.

ODDS: 8/1

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