Mr Cotton, who was also head of the BBC light entertainment department and controller of BBC1, accused it of being obsessed with journalism at the expense of entertainment.
'One member of staff, who happens to be the Director General, thinks that journalism is the corporation's core activity, but the BBC is forgetting that it has always been the entertainer of the nation, that its core activity is to make programmes that people enjoy. America has Hollywood and Britain has the BBC.'
His comments come in the week that BBC1's audience share fell to 28 per cent, its lowest for nearly a decade, and more than 10 per cent behind ITV. With the exception of soap operas and news programmes, only seven BBC1 programmes make the latest BARB top 50 - and two of those are repeats. It was also the week in which Jim Moir was suddenly removed from running the BBC's Light Entertainment department.
Will Wyatt, head of network television, said last week that 'BBC comedy is as good as I can ever remember it'. Viewing figures released this week will tell a different story. Only three BBC1 light entertainment programmes will be in the top 50. All of them - The Good Life, Open All Hours and Birds of a Feather - are repeats. Only one new BBC sit-com makes it into the ratings list: Every Silver Lining at number 74, with less than five million viewers.
The BBC seems unable to make the kind of mass-audience hit comedies that it used to: The Two Ronnies, Morecambe and Wise, The Likely Lads, Steptoe and Son, Porridge. Last week, the BBC's most expensive flop, the pounds 10m soap Eldorado, was finally laid to rest and the current BBC1 Controller, Alan Yentob, announced the end of That's Life, another mass-audience programme that has lost its mass audience. Now Mr Yentob has to decide if apparent failings of the current crop of programmes can be put down to mere nostalgia or if Mr Cotton is right and the BBC has lost its light touch.
Mr Yentob hopes that transferring Absolutely Fabulous to BBC1 for its second series will give him a big comedy hit to go with One Foot in The Grave. But many of the BBC's critically succesful comedies, often vehicles for the 1980s new wave of alternative comedians, have failed to win the giant followings Mike Yarwood or Morecambe and Wise did.
Jimmy Perry, now 68, who co- wrote Dad's Army, It Ain't Half Hot, Mum and Hi De Hi, says that Mr Cotton's theory bears examination. 'There are too many journalists running the BBC and not enough people with a background in entertainment.'
Mr Perry believes the talent is still there but says it is not given the resources to become extra special: 'Harry Enfield and Victoria Wood could make shows as good as Dick Emery and The Two Ronnies but the BBC have to put more money in and get better production values.'
John Lloyd, who produced BBC hits such as Blackadder and Not The Nine O'Clock News, argues that the current drive to efficiency at the BBC 'has led to people waiting to be told it is still all right to make great television.'
The BBC did tend to be run by newsmen, he said.
Alan Boyd, senior vice-president of light entertainment at Grundy Entertainment, which makes Neighbours - he is widely tipped to succeed Mr Moir - says that popular shows will never get the ratings they used to because of the wider choices represented by Channel Four, satellite channels and home video. But Mr Boyd says that the BBC is still suffering from choosing to ignore so- called 'reality shows' such as Blind Date and You Bet, that he pioneered while at London Weekend Television.
'When they launch a new show ITV will immediately put up a big Hollywood movie against it to kill it off. 'It is much more competitive than it used to be and the BBC has to stand up and fight.'
The problem for Mr Yentob and Mr Birt is that at present the BBC does not seem to have the programmes to do battle with. 'Some people and I am one of them,' said Mr Boyd, 'just know what is a hit light entertainment programme. It is an instinct.'
By popular consent, Bill Cotton had that instinct. But do Mr Birt and Mr Yentob have the will to find someone else with it quickly enough to arrest the slide in BBC1's audience share?