The chief executive of Channel 4 said they had adopted a policy of editorial dictatorship, imposing central control on staff, stifling talent and diversity.
He geared his attack to three areas: the governors, whom he wanted to see abolished in their present form because their intervention in daily programme matters made them unfit to represent the public interest; the policy of producer choice, which was undermining the talent base, one of the reasons for the licence fee; and the BBC policy of moving its programme mix upmarket towards the 'higher ground'.
Mr Grade urged the BBC's leaders to end their silence and mobilise a public army of supporters to speak out in the corporation's defence. They needed to launch a more aggressive campaign to seize a golden moment with the passing of Thatcherism, securing a long-term agreement for the licence fee, divorced from government intervention.
Mr Grade is a former BBC director of programmes. He resigned in 1987, despite being tipped for the post of managing director of BBC-TV, when it became clear he was unable to work with John Birt.
Mr Birt, his former colleague at London Weekend Television, had been recruited by the BBC as deputy director-general, and is the driving force behind changes now taking place at the corporation.
Giving the annual MacTaggart Lecture, which opens the four-day Edinburgh Television Festival, Mr Grade said there were two key events which marked the 'brutalisation' of the BBC under the current board of governors, chaired by Marmaduke Hussey.
The first was the crude sacking of Alasdair Milne. The second was when his replacement, Sir Michael Checkland, Director-General since 1987, described the BBC as a billion pound business.
Mr Grade said that it was 'a great cultural institution. Was that moment of public identification with business the moment when the BBC abandoned its heritage?'
He went on to advocate 'a single regulatory body for all terrestrial television'. This body should license the BBC to carry out its traditional role of education, information and entertainment. This would then clear the way for a unified BBC board of executives and non-executives. 'It would put paid to all the archaic constitutional nonsense that 'the governors are the BBC'. '
On the issue of producer choice he said that while the BBC should be able to cost programmes thoroughly it was in danger of destroying its talent base. 'If you dismantle the BBC's own resources you remove another crucial justification for the licence fee. If the BBC becomes just a publisher of other people's ideas what sole claim would they have for the licence fee? One is left with the conclusion that programmes are to become commodities: so many units of resource for a sitcom, so many units for a drama, et cetera. It seems to be a denial of everything the BBC stands for.'
Mr Grade also tore into what he described as the BBC's latest designer slogan - that its programmes should occupy the high ground. 'If BBC television becomes a cultural ghetto, a high-minded elitist service, it will certainly lose its claim to its two precious terrestrial channels. The high ground policy is simplistic nonsense. It will marginalise the BBC, reduce choice and erode the public's willingness to pay.'
He said that the BBC's timidity was understandable given the battering it received during the Thatcher era, but the threat had lifted with the change in government, though the BBC had not taken account of the fresh climate. He said BBC staff talked of the corporation's 'pre-emptive cringe'.
His speech was greeted rapturously by some sections of the audience. Howell James, the BBC's director of corporate affairs, and one the two members of its board of management at the lecture, said Mr Grade 'caricatures some of the ideas that have been discussed without properly considering the arguments behind them, and seemingly offers only that the BBC should respond to change by staying the same'.
He said the BBC could not afford to be nostalgic, had no desire to be secretive and could not ignore change going on around it.