ITV vulnerable as Grade stands aside
ITV boss Michael Grade is to step down from day-to-day management, becoming non-executive chairman before the end of the year, the broadcaster announced today.
Has Britain got talent?: ITV needs a new boss to replace Michael Grade
Grade, who is famed for his trademark red braces and cigars, is set to relinquish his role as executive chairman, as predicted by the Mail on Sunday and This is Money last month, after the end of a series of regulatory reviews in the broadcasting sector.
Industry experts said the move opened the way for a £1bn takeover bid for the struggling commercial broadcaster, with Italian prime minister and media mogul Silvio Berlusconi's Mediaset the latest name in the frame.
Any takeover of ITV would come as the entire British commercial television sector is at risk, with Channel 4 and Five struggling to survive. Other potential bidders for ITV include Walt Disney Corporation, Five owner RTL and Big Brother maker endemol.
ITV, which has been battered by an advertising slump, also confirmed it was not planning to make a cash call to shareholders after reviewing options to boost its balance sheet.
The company said: 'Michael Grade has recommended to the board that the conclusion of the regulatory reviews will be the right time for him to relinquish his executive responsibilities and become non-executive chairman, as planned.'
It hopes to appoint a new chief executive 'as soon as practicable' following the outcome of a major review into ITV's contract rights renewal (CRR), which protects advertisers from ITV abusing its dominant position when it sells airtime.
But an appointment will be made no later than the end of this year, according to ITV. Grade, who switched from the BBC to take the ITV job in November 2006, has also worked at London Weekend Television and spent more than nine years as chief executive of Channel Four Television.
The decision not to raise money via a rights issue will be a relief for shareholders. For weeks there had been speculation that it would ask investors for hundreds of millions of pounds of cash to tide it over the worst advertising market in 30 years.
It also denied that Grade was moving aside because investors had rejected his pleas for extra cash.
Ratings winner: ITV has become reliant on Simon Cowell-produced successes such as Britain's Got Talent
The sale of digital broadcaster SDN could raise up to £200m and ITV has also negotiated an extra £58m of covenant-free financing although it declined to say whether this came from existing or new bankers. ITV is also trying to sell social networking site Friends Reunited, which it bought for £175m in December 2005. It is now expected to fetch less than £50m.
Last month, the company said programme budgets will be slashed by £135m over the next two years after it revealed a £2.7bn loss for 2008 [read the full-year results].
Grade, 66, had always said his unprecedented role as executive chairman would be short-term but he stands down a year earlier than expected. His successor as chief executive is likely to be chosen from a trio of chief operating officer John Cresswell, commercial director Rupert Howell and director of television Peter Fincham although ITV said it would also look outside the company.
• Mail on Sunday media correspondent Jon Rees looks at the potential ITV suitors. Apax, Goldman Sachs and NTL (Virgin Media) have tabled bids before and BSkyB retains a stake.
- Read the full commentary
Sources said that despite today's announcement ITV has not entirely ruled out launching a rights issue in the future. But many in the City believe that it will attract a takeover bid long before that happens.
ITV shares, which have plunged by more than 75% since Grade took the helm two years ago, fell nearly 11% in early trading, down 3.5p at 28.5p. But as the significance of Grade's announcement sunk in - that ITV had become more vulnerable and a more likely takeover target - the stock bounced back and was in positive territory by midday.
• Read today's full ITV announcement
Interactive ITV share price charts
Biography: Michael Grade
Michael Grade, son of television executive Lew Grade, was born on 8 March 1943. He joined the Daily Mirror in 1960 as a sports journalist and, in 1966, went into the family theatrical agency. In 1973 he became an executive at London Weekend Television (LWT) and in 1981 he went to Hollywood as president of Embassy Television.
He returned to Britain in 1984 as controller of BBC One, and in 1986 became director of programmes, then managing director, television (designate). In 1988 he went to Channel 4 as chief executive and remained in that post until 1997. He then joined First Leisure Corporation, leaving as chief executive in 2000.
After that, he held several chairmanships and directorships, including positions on the boards of SMG (now STV) and The Television Corporation. He was chairman of the lottery operator Camelot from 2002 to 2004. In October 2006 he also became non-executive chairman of Ocado. He stepped down as role as non-executive chairman of investment website Hemscott in September 2006. He remains a director of Charlton Athletic football club.
He became chairman of the BBC in May 2004. He was also chairman designate of the BBC Trust. In November 2006 he resigned to become executive chairman of ITV.
The battle's lost: Sharpe, played by Sean Bean, will not return as ITV makes huge savings
He described the move as 'like coming home'. He vowed to 'give the BBC a run for its money', adding: 'I will do my best to restore ITV's fortunes.' His emphasis was on returning ITV to quality programming, particularly dramas, but was forced to back-pedal earlier this year and slash budgets due to the sharpest industry advertising slump in 30 years.
Outside broadcasting, Michael Grade chaired the Working Group on the Fear of Crime in 1989, and from 1994 to 1996 was a member of the National Commission of Inquiry into the Prevention of Child Abuse. He was chairman of Index on Censorship from 2000 before resigning the post in April 2004.
He was made a fellow of the Royal Television Society in 1991 and a Fellow of Bafta in 1994. He became vice-president of Bafta in June 2004. He holds an honorary professorship from Thames Valley University and an honorary doctorate from Nottingham University.
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