Will £3m be enough to tempt the woman who transformed Channel 5 to ITV?

There is no time like the Edinburgh Television Festival for broadcasting gossip and the talk at this year's shindig, which began yesterday, was dominated by one subject. Or rather one woman, Dawn Airey, and whether she will be tempted away from her position in control of Channel 5 to the more plentiful audiences of ITV.

Ms Airey, 41, has long been favourite to fill the vacuum at ITV left by the resignations of first Stuart Prebble, its chief executive, and then the director of channels, David Liddiment.

Now the speculation appears to be rattling RTL, the Luxembourg-based company which owns 65 per cent of Channel 5. Yesterday the talk was that Ms Airey's employers were preparing a big boost to her programming budget. Anything to keep her on board.

This is not the first time that Ms Airey, who earned notoriety for her three Fs programming formula – football, films and fornication – has extracted budget boosts when her talents looked likely to be poached.

She has repeatedly stated that it would be impossible to achieve the dreamed-of 10 per cent share of total audience, which would make the channel a serious rival to Channel 4, without a significantly greater amount of money.

The original Channel 5 became known for its late-night soft porn and lowbrow programming, but Ms Airey and a team bolstered by senior executives from Channel 4 have recently embarked on a move upmarket, which has proved a success both in terms of viewing figures and increased advertising revenue.

The shift was emphasised yesterday with the announcement that from 16 September the channel will be rebranded as simply "five".

Ms Airey's budget is a fraction of those of her rivals, and she has relied on audacity and flair to drive the channel to a 6.5 per cent audience share. It is these talents that appears first to have attracted ITV – which has suffered a prolonged loss of viewers and the humiliating collapse of ITV Digital – to Ms Airey.

But Charles Allen, the chairman of Granada, and Gerry Murphy, the chief executive of Carlton, the two principal companies behind ITV, are on holiday and negotiations are nowhere near complete.

A three-year deal of at least £3m has been mooted for the post, but Ms Airey is understood to be concerned about what would happen if Carlton and Granada were to merge within the next few years. There are also many in the television world who believe that Ms Airey would find it difficult to leave a channel that she has done so much to create and where her feisty style can secure swift results.

She earns in the region of £300,000 a year, but has "shadow share options" that would be worth a fortune if Channel 5 were to be floated or sold. Rupert Murdoch, the media magnate, has long been rumoured to be interested in acquiring the station and would be allowed to do so under the new media ownership laws proposed in the Government's Communications Bill.

Ms Airey's name has been linked to both the ITV chief executive post and the programming post of director of channels held, until he formally leaves, by Mr Liddiment. But her background is in planning and scheduling – she was a planner at Central TV at the tender age of 26 – not programming, and she made clear she would not leave Channel 5 to succeed Mr Liddiment.

The chief executive's job would be more tempting. She was in the running last year for a similar post at Channel 4. But these are trivialities for ITV, which desperately needs to get a candidate capable of tackling the immense problems created by the slump in advertising revenue, declining audiences and the seismic shifts in the broadcasting market that are likely if the proposed liberalisation of media ownership rules goes ahead.