Leading article: A zero-sum game that leaves ITV the victor

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The Independent Online

Though there has been a good deal of comment on the timing of Michael Grade's surprise defection to ITV, after two-and-a-half years as chairman of the BBC, this is by no means the most important aspect of the move. True, it comes in the midst of negotiations between the Corporation and the Government over the level of the licence fee. But the bulk of the work to safeguard the BBC's immediate future has been completed. The charter has been renewed. Another 10 years of the licence fee has been guaranteed. And the Corporation probably has enough of a following wind from the Culture Secretary Tessa Jowell to secure a reasonable financial settlement.

The real significance lies rather in the BBC's loss of a major broadcasting talent. In the creative industries, individual talents take on a great significance. And the market place for the very best is a zero-sum game. Mr Grade's move is very good news for ITV, but depressing for the BBC.

However, there may be some consolation for the Corporation. There has been an imbalance in the BBC's management since the Hutton report rudely ended the tenure of Greg Dyke as director general and Gavyn Davies as chairman. Mr Dyke and Mr Davies made a good combination. The talents of one were creative; the other's strategic. But neither of their successors, Mark Thompson and Mr Grade, were truly administrators. Reading between the lines it was clear that Mr Grade was increasingly frustrated by his lack of creative input. And the situation was only going to get worse with the replacement of the board of governors with a BBC Trust, headed by Mr Grade. The BBC now has a chance to see this imbalance corrected. The Government should appoint a new chairman who will be politically adept at dealing with the Corporation's vast bureaucracy and its relations with the outside world.

And what of ITV? The channel once called a licence to print money has been in steady decline for more than a decade. Recent years have been particularly traumatic. Advertising revenues are falling. Audience share has declined steeply, in the face of ferocious competition from satellite and digital channels. The channel's business strategy has been nothing short of a disaster. The collapse of ITV Digital in 2002 wasted £1.2bn. The ITV News channel had to be shut down last year. The merger of Granada and Carlton to create a streamlined ITV plc has done little to help. Staff morale is also low in the wake of a decision by management to end the final salary pension scheme. On top of all this, the company's management has been fending off takeover bids. It only escaped the clutches of the debt-laden NTL earlier this month, through the indignity of seeing its arch-rival, Sky, acquire a 19 per cent stake.

But despite all its problems, a Marks & Spencer-style turnaround for ITV could be round the corner. The channel is still Britain's largest commercial broadcaster. A few shrewd deals could unlock its great potential. Negotiating an easing of its advertising constraints, for instance, could substantially increase revenue.

But the best way to lure back the advertisers is for ITV to make innovative and popular programmes once again. Charles Allen, the previous head of ITV, was an effective cost-cutter but failed to devote enough time and resources to quality programming. In Mr Grade, ITV has an inspiring and experienced programme commissioner at the helm; someone who instinctively understands the requirements of television. News of his appointment alone seems to have boosted staff morale. Mr Grade announced yesterday that he will be as hands on in his new post as he needs to be. It is a pretty safe bet that he will not find himself twiddling his thumbs.