Granada and Carlton in the firing line as Dawn Airey spurns ITV for BSkyB

Dawn Airey's decision to join BSkyB as head of non-sports programming is a serious blow to ITV, City analysts said yesterday.

ITV had hoped to lure Ms Airey from Channel 5 to become its new chief executive. But the network is now back to square one in its search after the latest in a series of setbacks this year which have included the implosion of ITV Digital, the fiasco over the Nationwide league football sponsorship and a dramatic slump in advertising revenue.

The news is likely to place further pressure today on the share prices of Carlton and Granada, the dominant shareholders in ITV. One media analyst said: "It clearly sends out a negative signal. Did she look at the job and decide not to take it because it was not the kind of thing she wanted to put her name to? Rightly or wrongly, I think that's how the market will react. There will be a sentiment impact."

Another said: "They (ITV) got themselves in a mess by allowing Dawn Airey to be seen in the media as their first choice. It's a negative because they can't keep being run the way they are. And they can't pursue a merger (between Granada and Carlton) without a chief executive."

Analysts said the appointment might also have a positive impact on BSkyB's shares as the satellite broadcaster will be seen to have spiked the guns of its arch rival yet again. "Tony Ball (Sky's chief executive) must be loving it," another analyst said.

However, ITV played down the significance of Ms Airey's decision. A spokeswoman said: "The reality is that the process (of finding a new chief executive) continues and there are a number of other candidates. Our ratings are improving, more money is being injected into the channel and there is a very strong executive team here. It's Channel 5 that has the biggest headache, not ITV. They'll be left without a leader."

ITV said it hoped to announce its appointment in about a month's time.

Carlton and Granada also tried to a put on a brave face. Carlton said: "There is a shortlist of candidates that ITV has been looking at. She (Ms Airey) was obviously a favoured candidate. But there are plenty of other senior people in TV in this country and overseas with lots of experience."

Some analysts expressed an optimistic view on Granada and Carlton saying this latest problem could mark the bottom for the shares. Kingsley Wilson, at Investec Henderson Crosthwaite, said: "From here the question is does it get worse or does it get better. The autumn schedules seem to be working. October's advertising was up 10 per cent. Maybe the story for the current year will be better."

Another analyst said: "The share prices are discounting any recovery in advertising, ever."

Ms Airey's salary will reportedly be about £1m a year as managing director of Sky Networks, making her one of the most highly paid women in Britain. The role gives her control of all Sky's non-sports programming including Sky One, and Sky News. It also puts her in direct competition with ITV as she will have control of three free-to-air slots on Freeview, the digital terrestrial channel due for launch this autumn.

Analysts said the capture of Ms Airey was a statement of intent that BSkyB plans to increase its investment in programming. One said Sky might try to produce a US-style channel with bought-in content but also high quality programmes produced in-house.

Separately yesterday Carlton denied reports that it is planning a rights issue.