I think that actually was a case of ITV turning it down and the BBC taking it on. I believe Steve has talked about this before on here.
Yes, ITV did turn it down, and it ended up on BBC1 - as did the spin-offs from the USA and Russia. Granada also made 7 Up 2000 for BBC1, but that was commissioned by the BBC and continued on there. Actually there should be another instalment of that next year, not that anyone remembers it's still going.
In Will Wyatt's book about being director of BBC Television he talks about Richard Dunn from Thames visiting him in 1991, before the franchise results were announced, and asking if the Beeb might be interested in a few of their shows like This Is Your Life and The Bill, so that if the worst happened they'd know they had a few options open for their formats and didn't have to put all their eggs in one basket. Of course, they did end up going for the former, but not the latter.
The other Caroline Aherne show that Granada made for the Beeb was Mrs Merton and Malcolm, which only appeared a few months after the first series of The Royle Family in early 1999. At the time this was considered the safer bet, being shown on primetime BBC1 and a more conventional sitcom, compared to the Royles on late night BBC2, but it turned out to be the most enormous flop critically and commercially, with thousands of complaints about its portrayal of, it appeared, a man with learning difficulties, though they always said that was never the intention. Would be interesting to see that again, actually, it was never repeated but the Royle Family was such a huge hit - it got a very quick repeat run - that it didn't really matter in the end.
Clearly at the time Aherne had made her name on the Beeb but liked working with the team at Granada and so continued to make her shows through them. It's the same with Jimmy McGovern, for many years most of his shows have been on the Beeb but they've pretty much all been produced by Granada/ITV Studios because he knows and likes the people there. It's just like any other production company.
It's easy to forget how quickly Mrs Merton took off, the first series was at 11.15 on BBC2, but it caught on via word of mouth with the second series in primetime and then the third promoted to BBC1. It probably went on at least two series too long, though, the decline seemingly setting in when they did the show from Las Vegas which was a bit of a disaster, I remember reading they'd commissioned three shows but one was so bad it couldn't be shown and was hastily replaced by a documentary following all the audience around Vegas.
Night Thoughts gave kudos