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The 79-year-old, who has held top positions at the BBC, ITV and Channel 4, is thought to have beaten fellow peers EdVaizey and Stephen Gilbert and former newspaper editor Paul Dacre to land the job.
The recruitment process for the three-day-a-week, £142,000 role took two years.
Lord Grade has spoken in favour of privatising Channel 4 and has said the BBC’s £159 licence fee is “too much money”.
Announcing his appointment, Culture Secretary Nadine Dorries said his “experience at the highest level of a number of broadcasters and his expert knowledge of the British media landscape makes him an ideal candidate”.
Lord Grade said: “Ofcom is respected across the globe…I am privileged to be asked to become its chair.”
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