The succession woes at ITV PLC (ITV.LN) continued Monday after two of the leading candidates for the chairmanship dropped out and long-time chief operating officer John Cresswell was appointed interim chief executive but said he will leave the company once a replacement is found.

The struggling broadcaster has seen a succession of candidates for the roles of both chief executive and chairman rule themselves out, at a time when it needs strong leadership to steer it out of the advertising slump and to counter the structural challenges from the rise of digital media.

The original front-runner for CEO was Simon Fox, the head of HMV Group Ltd. (HMV.LN), followed by Tony Ball, the former head of British Sky Broadcasting Group PLC (BSY.LN). Fox pulled out early in the race, while Ball's candidacy for CEO was played out in the press but ended abruptly last month after differences over remuneration and the selection of a new chairman.

News Corp. (NWS), owner of this newswire, has a roughly 39% stake in BSkyB.

And ITV said Monday that the leading candidates for the chairmanship, Crispin Davis, the former chief executive of Reed Elsevier (REL.LN) and Michael Bishop, former head of Channel 4, were no longer in the running, compounding its leadership problems.

"The nominations committee has revised its shortlist accordingly and is continuing its search with due speed," the company said.

The succession issues began earlier this year when executive chairman Michael Grade said he would relinquish the CEO role once the company had found a replacement. Then, after talks with Ball were terminated, Grade said he would stand down as both CEO and chairman once a new chairman had been found.

ITV said Monday that Cresswell would reprise his role as interim chief executive, which he last held in 2006 before Grade's appointment, until a chairman is appointed, but would then leave ITV after nine years at the company.

With two of the top candidates for chairman no longer in the running and Cresswell set to leave, Monday's developments create more uncertainty, said RBS analyst Paul Gooden.

ITV's leadership issues come at a difficult time for the U.K.'s largest terrestrial broadcaster, which is struggling with a steep drop-off in advertising caused by both the migration of advertisers online, the dispersal of ad revenue to digital TV channels, and the fallout of the recession which has severely curtailed advertising budgets.

Still, in a note to clients Monday, Goldman Sachs said there were signs of improvement in the U.K. advertising market, with easier comparative figures and late money, or advertisers booking slots at short notice, expected to have a strong beneficical impact on the third and fourth quarters.

To be sure, ITV's net advertising revenue is expected to be down 13% to 14% for the full year, but the declines are moderating.

Goldman Sachs upgraded the broadcaster to buy from neutral based on an advertising recovery based on an improvement in the wider economy, some easing of ITV's regulatory burden, and the already swingeing cost cuts the company has earmarked.

At around 0836 GMT, ITV's shares were up 6%, or 3p, at 49p.

Company Web site: www.itvplc.com

-By Kathy Sandler, Dow Jones Newswires; 44-207-842-9293; kathy.sandler@dowjones.com