This story was broken by the BBC's former Business Editor, Jeff Randall, in the Daily Telegraph:

Grade defects to ITV
By Jeff Randall, Editor at Large
Last Updated: 8:54am GMT 28/11/2006

The BBC’s chairman, Michael Grade, has sensationally switched-over to become executive chairman of ITV.
     
His resignation from the BBC, revealed by the Telegraph yesterday, is effective immediately, enabling him to take control swiftly at the corporation’s biggest terrestrial competitor.

ITV has been searching for a new boss since Charles Allen departed in August.

Grade’s defection will stun colleagues and cause mayhem inside the BBC, which is in the final stages of licence-fee negotiations with the Government. The corporation today said it was "disappointed" about his departure.

The move will also shock the City, where bookmakers had not bothered even to include Grade on their lists of runners and riders for the ITV job.

However, the considerably higher pay Grade will receive at ITV is likely to have influenced his decision. Details of his salary included in this morning’s statement showed he will receive a base salary of £825,000 as well as a potential bonus.

He will also be eligible for a long-term share award based on ITV’s performance over five years equivalent to 150pc of his salary. At the BBC, he is earning around £140,000.

Charles Allen, the man Grade replaces, took home £1.852m last year, including a £777,000 bonus despite ITV’s average performance in 2005. Grade will also be eligible for an ITV pension and will be on a 12-month notice period.

"It's like going home," said Grade, referring to his return to the channel co-founded by his uncle where he got his first television job in 1973. "It was a very difficult decision to leave the BBC but it's an exciting challenge."

"ITV is one of the great British media brands and it is going through a difficult time at the moment and I relish the chance to turn it around," he added as he left his home in Wandsworth this morning.

ITV has also scrapped a planned £251m buyback - a clear indication that the broadcaster intends to use the funds to invest in programming, the area in which ITV’s critics say it has fallen short. ITV shares rose 1¼ to 113¾p on the appointment.

Grade, who will take up his new post in the New Year, has led the BBC’s controversial demand for a new licence fee settlement of 2.3 per cent above inflation, which, it is understood, has been resisted strongly by Tony Blair and the Chancellor Gordon Brown.

Tessa Jowell, the Culture Secretary, who has been sympathetic to the BBC’s case for a sharp increase in funds, will be dismayed to receive the resignation of the chairman she supported before her Cabinet superiors.

By any yardstick, ITV’s poaching of Grade, executed with great stealth over several weeks, marks a new level of cut-throat competition among Britain’s media companies. It comes just 10 days after Rupert Murdoch’s BSkyB swooped on 18 per cent of ITV to block a potential merger with the cable television operator NTL.
     
Rupert Murdoch's BSkyB bought 18 per cent of ITV to block a potential merger with NTL 10 days ago

Managing the daunting presence of Murdoch on his share register will be just one of the considerable challenges facing Grade at ITV. Another will be maintaining diplomatic relations with Sir Richard Branson, whose Virgin group owns about 10 per cent of NTL.

Sir Richard is demanding that the Government invalidates BSkyB’s stake in ITV.

Grade, who was BBC1’s controller in the 1980s, rejoined the corporation in 2004 after its reputation had been eviscerated by the Hutton report into events surrounding the death of Dr David Kelly, the weapons expert.

That public humiliation prompted the resignation of Grade’s predecessor, Gavyn Davies, and the director-general, Greg Dyke. Grade has since tried hard to rebuild morale inside the BBC, while supporting new director-general Mark Thompson’s efforts to shed about 4,000 jobs.

It has been a very difficult juggling act. His task at ITV, however, will be even more testing. As executive chairman, Grade must address massive structural changes in the broadcasting business while fixing deep-rooted problems specific to ITV.

Critics argue that, although Allen was a ruthless cost-cutter, he failed to devote enough time and resources to quality programming. As a result, ITV’s output moved too far downmarket.

The upshot has been a collapse in the number of viewers watching ITV1 and a precipitous decline in advertising revenues. ITV’s shares have performed woefully.

Earlier this year, a consortium, headed by Greg Dyke, bid 130p a share for ITV, but the offer was rejected by the board as inadequate. That put enormous pressure on the current chairman, Sir Peter Burt, a former banker, to come up with something better.

For a long time, it looked as though he would fail. By delivering Grade at the 11th hour, Burt has pulled the unlikeliest of rabbits from a hat.

It is a move that could salvage his reputation.

This is taken from The Guardian:

BBC seeks promise of confidentiality
by Leigh Holmwood
Tuesday November 28, 2006

The BBC's board of governors is to write to the ITV board within the next few days asking for a formal guarantee that Michael Grade will not use confidential information he knows about the corporation in his new job.

The BBC board - now led by the deputy chairman, Anthony Salz - will ask for a formal letter in a bid to protect confidences.

Mr Grade, who officially stepped down as BBC chairman this morning and will become ITV executive chairman early next year, has been intrinsically involved in the corporation's bid for an above-inflation licence fee settlement as well as securing the new charter.

"I expect the board of governors will be writing formally to the board of ITV and they will want an exchange of letters put on record," a senior source said.

"They will want to ensure confidentiality of information relating to the BBC and how Michael needs to ensure that is protected.

"They will write in the next few days to establish that kind of agreement.

"Nobody is questioning Michael's integrity but what the BBC needs is something on record that formalises it."

Mr Grade, who is currently only two and a half years through his four-year term, is not expected to undertake a period of gardening leave before joining ITV and will join early in the new year, although no start date has yet been confirmed.

He is the third consecutive BBC chairman to resign, following Gavyn Davies after the Hutton inquiry and Sir Christopher Bland, who stepped down to join BT.

Mr Salz took over as acting BBC chairman this morning, although as he is not transferring to the BBC Trust - which replaces the governors at the beginning of next year - he will only serve until the end of December.

If no new chairman is in place by then, the BBC Trust's current deputy, Chitra Bharucha, will take over.

The Department for Culture, Media and Sport is expected to begin the process of finding a new BBC chairman soon.

The BBC this morning insisted that Mr Grade's departure will not affect the transition to the new Trust and the licence fee negotiations.

New licence agreements for each BBC service are also still expected to be completed by the end of the year.

"There is a good strong team of people in place who are a collective decision making body," the source said. "They know what their duties are and they will fulfil them."

A BBC spokesman said: "As disappointing as it is personally, it will not have an impact in the way we are preparing for the Trust."