BBC wanted ITV penalised when comedy duo switched sides

The defection of Morecambe and Wise to ITV in 1978 was such a devastating blow to the BBC that its governors planned to lobby the government, secret papers have revealed.

They wanted to try to rein in the massive spending power of the independent television companies. But in the short term, the corporation decided the best strategy for countering the "damaging loss" of Eric and Ernie to the opposition was to repeat their phenomenally successful Christmas show of 1977 on Christmas Eve the next year.

It was at a sombre meeting on 30 January 1978 that the BBC board was first told how the corporation's offer to keep Morecambe and Wise had been finally rejected by Britain's most famous comedy double act.

A note of the minutes of the meeting released to The Independent under the Freedom of Information Act reveals that Thames Television had agreed to pay the duo "very large sums" for just two shows a year.

In its initial response the board suggested rerunning the 13 shows screened in 1977 as well as the Christmas special, which had attracted a record 27 million viewers.

Days later the BBC's failure to keep Morecambe and Wise had made front-page news and the mood at the top of the BBC had hardened. The governors agreed that "something should be done about ITV" or the BBC would continue to lose out in high-profile bidding wars.

One of the new governors, Lord Allen of Fallowfield, argued that ministers needed to intervene because ITV was "fuelling inflation by raising the public demand for consumer goods". Others supported introducing a "levy" on ITV profits so that the BBC could operate on a level playing field.

Bill O'Hara, a governor supported by Lord Allen, advocated a year-long publicity campaign to counter the propaganda successes of the commercial broadcasting companies, whose "great wealth" had enabled them to poach talent from the BBC.

Lord Allen wanted to know why the board could not tell the public that it was only the "lure of money" that had lost them Morecambe and Wise. But the then director-general, Ian Trethowan, warned that publishing the full facts behind the negotiations could easily backfire by damaging the BBC's reputation. He said that before ITV had added a film deal to its offer, the BBC had still been able to match the bid.

"Were other entertainers to know how high [the BBC had raised the bid] Mr Milne [Alasdair Milne, director of programmes and later director-general] would be in a very embarrassing position," the minutes noted.

Sir Michael Swann, the BBC chairman, questioned whether the loss of Eric and Ernie was such a tragedy. "Had they perhaps passed their best?" he asked.

It was an odd remark given that their Christmas show had attracted record audience figures and it was reported that the Queen had put back her Christmas lunch by an hour to watch Morecambe and Wise on the television.

Nevertheless, Sir Michael was supported in this view by Lord Greenhill of Harrow, another governor.

It was left to Lord Allen to remind his fellow governors that the comedy duo's Christmas show "had delighted millions".

But the reality was that both institutions were in decline. Eric and Ernie left the BBC without their most accomplished writer, Eddie Braben, with whom their career had reached such extraordinary heights. It was his idea to have the two comedians sharing a bed - a conceit at which Eric had first bridled until Braben reminded him that it had worked very well for Laurel and Hardy.

But Braben was contracted to remain with the BBC and Eric and Ernie never again recaptured the viewing figures that their 1977 Christmas special had attracted.

The BBC was also heading towards choppy waters. The previous year, a government-appointed body, the Annan committee, which had been set up to report on the future of broadcasting, criticised the corporation for "loss of nerve" and "organisational fog". It meant that the BBC had lost its battle against the independent television companies and paved the way for the establishment of Channel 4 in 1982.

But in early 1977, the confidential papers show that even in the aftermath of the defection of Eric and Ernie, the BBC still believed it could win the PR battle.

Trethowan said the public were beginning to understand the financial constraints under which the BBC had to operate. In Fleet Street the "penny had dropped", he said.

And with echoes of the current funding crisis facing the corporation, several governors complained about political obstacles to increasing their funding.

Sir Michael Swann said it was politicians, rather than the public, who baulked at increases in the licence fee. Lord Allen argued in favour of the BBC being more "astute" in its campaigning to create relations with ministers. He repeated Lord Greenhill's advice about not "spitting in the eye" of a secretary of state.

"We should try to keep friends in the cabinet without selling any of our principles," Lord Allen added.