BBC stunned as Michael Grade defects to ITV

ITV has poached Michael Grade, the chairman of the BBC, as its executive chairman in a sensational hiring for the beleaguered broadcaster, it emerged last night.

For ITV, the appointment will be considered a massive boost. The company has been losing viewers precipitously, advertisers have gone cold on it and its chief executive quit in the summer after shareholders made clear they would no longer tolerate the poor performance.

Mr Grade, 63, is highly regarded as a businessman and as a media executive. Among his previous jobs, he has been chief executive of Channel 4 and director of television at the BBC. Analysts said that Mr Grade's experience and achievements place him well above most of those tipped for the vacant chief executive job at ITV. The charismatic, cigar-smoking, Mr Grade is the "big name" that ITV has desperately sought.

ITV, which is listed on the London stock market, has this year been the subject of takeover bids, which the company has been in a weak position to repel. In the spring, a consortium of City investors, led by the former director general of the BBC, Greg Dyke, made an unsuccessful attempt to buy it.

Cable group NTL, where Sir Richard Branson is the biggest shareholder, made a takeover offer earlier this month, only to find, just days later, that Rupert Murdoch's BSkyB had secretly stepped in and bought an 18 per cent stake in ITV.

Mr Grade will replace both the current chairman of ITV, Sir Peter Burt, and take on the responsibilities of the vacant chief executive position. ITV has been without a chief executive since Charles Allen announced in August that he was leaving.

Investors were concerned about the length of time ITV was taking to find a new chief executive and the calibre of the candidates tipped for the job. Although a long list of names had been touted, Mr Grade's name was not prominent, as he already held a high-profile media job that it was thought he was committed to.

One insider at ITV said: "This is a fantastic coup for ITV. Everyone is absolutely over the moon."

Mr Grade's defection comes at a sensitive time for the BBC, just as it is trying to finalise a settlement with the Government over the level of its licence fee.

In January, Mr Grade was to swap his role at the corporation from chairman of the board of governors to the chairman of the newly created BBC Trust, which will be the ultimate authority at the BBC from January next year.

Mr Grade rejoined the BBC in 2004, after the Hutton inquiry had led to the loss of director general Greg Dyke and chairman Gavyn Davies. The corporation subsequently started a huge cost-cutting exercise that led to the loss of thousands of jobs.

ITV is still comfortably the nation's biggest commercial broadcaster, with more than a fifth of the audience, but its share has been shrinking alarmingly in recent years, due to both its programming faltering badly, with a string of flops such as Celebrity Wrestling, and because of the growth of digital television.

The company has also struggled to compete with the financial firepower of the publicly funded and increasingly commercial BBC on the one hand, and the resources of Sky in the private sector.

Mr Grade's first task will be to fend off the unwanted takeover attempt by NTL and decide how to handle Rupert Murdoch, the biggest shareholder.

A priority for Mr Grade will be to convince ITV's regulators to allow it to charge advertisers more - the current restrictions cost the broadcaster hundreds of millions of pounds.

The was speculation that Culture, Media and Sport Committee would question Mr Grade over his move, but, John Whittingdale, chairman of the committee, said that he was "perfectly entitled ... to take up the job". He added that Mr Grade was likely to be invited to give evidence to the committee's inquiry into the future of public service broadcasting, but that he would not be questioned about his decision to switch jobs.

Shadow culture secretary Hugo Swire said: "This is a massive blow to the BBC and to the Government. We will be calling upon the Secretary of State to come to Parliament and explain what this news means for the future running of the BBC."

A blazing ambition

* Michael Grade, 63, became chairman of the BBC in 2004

* His career in the media started in 1960 when he worked as a sports journalist on 'The Daily Mirror'

* In 1973, he was made an executive at London Weekend Television and, eight years later, became president of Embassy Television, working in Hollywood

* He returned to Britain as controller of BBC One in 1984 and, two years later, became director of programmes, then managing director, Television

* In 1988, he moved to Channel Four to become chief executive and held the post for nine years until 1997

* During the the past decade, he has worked as chief executive of First Leisure Corporation and chairman of lottery operator Camelot plc from 2002 to 2004

* He is a director of Charlton Athletic Football Club, non-executive chairman of Pinewood Shepperton and, last month, became non-executive chairman of Ocado. He is also vice-president of Bafta

* This year, Grade was ranked the seventh most powerful person in the media, one place below former ITV chief executive Charles Allen.