Last-minute drama in contest to head Channel 4 as joint favourites pull out

The two favourites to succeed Michael Jackson as chief executive of Channel 4 have both suddenly withdrawn from the race, giving the succession more last-minute drama than many of the channel's programmes.

Dawn Airey, chief executive of Channel 5, says she wants to stay where she is as Channel 5's development is at a crucial stage. Peter Bazalgette, the creative director of Endemol Entertainment, makers of Big Brother, told staff yesterday that he would remain in his current post.

Both were fancied to take over from Mr Jackson, who leaves at the end of this month to take a job in the US.

Their withdrawal leaves Mark Thompson, director of television at the BBC, as one of the strongest candidates. Colleagues believe his game plan could be to gain experience at the top of a major broadcasting organisation, with the aim of returning to the BBC eventually to succeed Greg Dyke as director-general.

Also believed to be in the frame are the Labour peer Lord Alli, the former head of science at the BBC, Jana Bennett, the former chief executive of ITV, Richard Eyre, and the head of the independent production company Talkback, Peter Fincham.

Dawn Airey was increasingly tipped to make the move from C5 to C4, despite her channel's down-market programming. Indeed, she had been approached by Channel 4 itself, rather than having applied for the post.

But in an interview with the trade magazine Media Week today Ms Airey, who is known for her plain speaking, says: "The person who will get the job will have to have great diplomatic skills, because it's really a senior civil service appointment."

Ms Airey worked with the Channel 4 director of programmes Tim Gardam and its director of strategy David Brook when she worked at the channel in the mid-Nineties. But she said: "I very much see my future here at Channel 5, as long as the shareholders are happy with me. To be frank I think it's more of a challenge to stay here."

Airey was Channel 4's controller of arts and entertainment in her time there and was credited with securing two of the channel's biggest hits, Friends and ER.

Mr Bazalgette was thought to be the other favourite for the job, his commercial experience proving very attractive to Channel 4 in recessionary times.

Mr Thompson, who applied for the post of BBC director-general but was beaten to it by Greg Dyke, is highly thought of at the BBC, and could help Channel 4 redefine its public service remit, something that the outgoing head Michael Jackson says urgently needs to be done.