According to Michael Grade, Eric Morecambe used to carry with him an old review from the Daily Express that went: “Is that a television I see before me? No, it's the box the BBC buried Morecambe and Wise in last night.”

Television's great anecdotalist, you see, is offering me a little story that puts journalists in our place. Grade's daring new ITV schedule included a series of flops, but its executive chairman is not breaking into flop sweat. “It's tough, but you have got to have faith in the material. Look at the material, forget the numbers, look at the audience- appreciation figures and say to yourself, ‘Do we believe in this show?' If you do, you go with it.”

Less happily for him, the Eric and Ernie story spotlights another fact. Although he jokes he is the “Jewish Dorian Gray”, Grade was 65 on March 8. His career stretches so far back that he was actually the agent who negotiated Morecambe and Wise's return to the BBC after a career-saving sojourn in commercial television. ITV shareholders, now nursing a share price half what it was when Grade took over last year, may not be as impressed as I am by stories that star Norman Wisdom, Frankie Vaughan, Bruce Forsyth, Tony Hancock and the Two Ronnies. Those were the days, my friend. A storm squalls past his penthouse office in ITV Towers. An invisible cigar dances in front of his face. I ask if big-name talent still counts in television. Of course, he says - although the talent is a bit different, a bit smarter, a bit more challenging, these days. He cites ITV's Al Murray and Harry Hill. But it is when I query the point of another pair of ITV faces, the distinctly unchallenging Ant and Dec, that the conversation gets interesting.

“Uncomplicated, straightforward, unpretentious and so agreeable,” he says of the Saturday Night Takeaway stars. “You know, there's an awful lot of TV over the past five years that has been about cruelty and voyeurism. They're an antidote to all of that. It's just nice. Like Bruce, you know, Bruce Forsyth. I was at his 80th birthday party the other night and had to say a few words. I said, ‘The great thing about Bruce is words like cruelty and humiliation are not in his vocabulary'.”

Is the age of cruelty, evident in most reality TV, drawing to a close?

“I think it's gone too far. Yes, I do. I think once you go down that road, as Big Brother has, all you can do is just keep turning up the heat and it becomes almost car-crash television in human terms. When Big Brother started I thought it was an absolutely brilliant, brilliant show. It was about relationships and the dynamics of different personalities and so on, but it's kind of descended into a rather toe-curling observational show about people that just want to be famous.” A senior Channel 4 executive told me that it had become an embarrassment that they'd like to junk. “I think it's rescuable. I think they should just go back to its origins, which is find some really interesting people and throw them together. See how the schoolteacher interacts with the bookmaker. It's not my problem. But what's interesting is that when Britain's Got Talent hit the airways it was on nine consecutive nights and it started at whatever it was, four million, four and a half million, and the show built in a really amazingly steep line and we ended up whatever it was, 12, 12 and a half million on the last night.”

In the middle of it there was an away day with Simon Shaps, ITV's outgoing director of television. (“He invited me,” he says diplomatically.) And they were on a high because of the success, and he told them that maybe, maybe, there was something important about this particular talent show that they should watch carefully. And that important thing was that the show was essentially a “celebration”. As the week wore on, he had noticed that even the most outspoken judges, Simon Cowell and Piers Morgan, were throwing less mud, their comments becoming more constructive.

“There was a tonal shift. And the success of shows such as Doc Martin - I don't know whether you've seen that, set in Cornwall - Kingdom, Lewis to a certain extent, Wild at Heart, these are very agreeable shows. It's not the hard-edged, seamy side of graphic, horrible life. I think there's a mood change.”

But what, I interrupt, of the early audition sequences in The X Factor in which overweight teenagers and pensioners with speech impediments are ridiculed by the millionaire Cowell? He thinks Cowell, whose judgments are so “brilliant”, has softened even on The X Factor. “I think the tone is absolutely right on the show and it is a celebration of talent. It builds towards that.” He offers an historical analysis of popular entertainment. In the Depression, Hollywood pedalled Busby Berkeley musicals, Cinderella-stories, escapism. As prosperity grew in the Sixties, Britain became ready for kitchen-sink reality.

I ask, then, if nicer television predicts a recession. “No, I'm predicting that people want celebration and they want to feel good.” Which would mean no more Prime Suspect or Cracker? “Well, they're so established that they're not susceptible to that trend. They're such brilliant masterpieces of television. But I think there is a mood change.”

Could it be that British TV's most experienced executive is once again ahead of the curve and that we critics are to be left grumbling behind it? The problem if he is right, however, is that ITV's latest week-night offerings have not been uncomplicated, straightforward or unpretentious. Nor have they been very agreeable to ITV audiences. Grade is in his office by 8am. He reads the Financial Times, The Guardian and then the press clippings. At around 9.30am the “overnights”, the viewing figures, flash on his screen. None of the above can have made easy reading in the weeks since he launched his new schedules in January. Not one of ITV1's 9pm dramas rated even 5 million viewers. In consequence, the relaunch of News at Ten was scuppered.

“The thing that would really have depressed me was if the shows were ghastly, but I thought The Palace was extremely good. Difficult for an ITV audience: ‘What is this? Is this a micky-take of the Royal Family? Is it a spoof? What is it?' It was kind of difficult. Was it a compelling piece of popular drama? Yes.” More of it? “Don't know. I haven't talked to Simon [Shaps]. We'll look at the research and so on. Moving Wallpaper: best new comedy since The Thick of It or The Office. Total surprise for ITV to be doing a comedy as clever and as funny as that.”

The Billen household agreed, I say, but then we thought of the in-laws, in their sixties, fans of The Bill. What they would make of it? “Look. ITV got to a point a few years ago where it was bit like the Tory party: absolutely down to its hardcore support, no floating voters, no light viewers. The hardcore of support was pretty big, but nevertheless you can't grow from there. And what we're having to do is to refresh the schedule, get people reading our listings again.”

But can he afford to lose his hardcore? Because every time the Tories have tried to reach out, they've eventually reverted to courting their hardcore supporters, because, as William Hague said, you need someone to vote for you. “It's a limited metaphor,” he says.

He has held all of the big jobs in British television: director of programmes at both LWT and BBC, chief executive of Channel 4 and, in a return to broadcasting that surprised no one as much as himself, chairman of the BBC after Greg Dyke was fired. By defecting to ITV, the prodigal returned to the family business, much of which was originally owned by his uncle, Lew Grade. ITV is his birthright. He remembers being unhappily lodged at boarding school and being cheered when ATV, the channel Lew owned, announced its launch in 1955 with a racy, half-page advert- isement in The Times. “Tiller Girls in The Times! That was the family. That was pretty special.”

But the home he has come back to has changed. He rightly insisted on the return of News at Ten but already under his tenure ITV has abolished the Sunday politics slot made famous by Weekend World and Walden. With the departure of Jonathan Dimbleby, it no longer even has a star political interviewer. (He expects to be in “good shape” on that score by the election.) The channel that enriched my childhood with Robin Hood, Thunderbirds and Magpie no longer broadcasts children's programmes during the week. (“It's not sustainable, not supportable today in the commercial world.”) The regions that used to produce the most watched local programmes on television are merging and local news is being moved to the net. (“I'd like to keep doing regional news because I think it's one of the things that distinguishes ITV, but we must be left to configure it in a way that we think is affordable and sustainable.”) As for culture, the man who claims to have scheduled Glyndebourne on ITV at primetime confesses that if his cultural commissar Lord Bragg came to him with an equivalent project he would say no.

“It was a patrician age, a golden age, unquestionably, but we're very, very lucky in this country that we still have support for public intervention in the market, mainly the BBC.” So is ITV any longer a public service broadcaster? “I think that public service broadcasting means different things to different channels now, to be honest. What is public broadcasting so far as ITV is concerned is very different to the BBC. Public service broadcasting, in my book, for ITV is where the public interest and the shareholders' interests combine, and that's in investment, a billion pounds of investment every year in British production for British audiences. But we must be free to decide what we make and how we spend that money.” He wants to be freed from the regulatory chains that still shackle ITV and were applied when it still held “a licence to print money”. But even if the obligations were loosened, it could still go so wrong. If ITV's share price continues to fall, the broadcaster could be bought by foreigners. By 2012, when the final analogue transmitter is switched off, Britain might be left with the BBC, Channel 4 and any number of Living TVs, one of which might be called ITV.

“It is possible, yes. It certainly is.” Is he here to ensure that does not happen? “I'm here to make a business out of ITV again. That's what I'm here to do.” ITV's viewing share across all its channels is up, but its revenues are down. Two weeks ago it announced a 35 per cent collapse in profits. The business press, initially excited by his arrival, now doubts him. One journalist, citing the decline of the Grade family business, First Leisure, the one that once owned Blackpool Tower, wrote that he was “either a rotten businessman or an unlucky one”.

“Ten minutes of desktop research will tell you the proper history of First Leisure, which was a mini- retail leisure conglomerate in businesses that were all ex-growth. I broke up the company, gave the cash back to the shareholders and a lot of the businesses that I sold at the top of the market have since gone bust.” First Leisure may be no success story but it shows that Grade, for all his twinkly assertions of family values, is not a sentimentalist. Bernie Delfont's widow, who recently died, fiercely denounced his strategy. Equally, when all those years ago he negotiated Morecambe and Wise's escape from ATV, he risked and received Uncle Lew's displeasure. And here is another thing. Although Grade is criticised for keeping too much power to himself at ITV, he claims to be a hands-off boss. Indeed, when we meet, I am in the strange position of knowing more about ITV's new thriller series, The Fixer, than Grade. I have reviewed a preview disc; the man at the top of ITV does not watch his main channel's commissions before transmission.

“That's Simon's job. That's not my job.” But he is meant to be good at spotting winners. “You've got to be careful, you know. I'm now 65, my taste is...what can I say? You've got to leave it to the youngsters.”

As it happens, The Fixer on its first airing rated well at 6.2 million. I am glad for him. In his memoirs, a decade ago, he confessed that his personal life had paid a high cost for his career. Now on his third and happiest marriage, with a son aged 9, he is running a beleaguered company at a time when his contemporaries are on the golf course and watching The Bill. The cruel age of reality television may be over; the realities of television will only get crueller. It would be terrible if ITV became the box in which its favourite son was buried, so good if Grade turned out to be The Fixer.

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