Channel 5 Owner Triples Profit Amid Near-Recession Conditions
LONDON -- Bucking near-recession conditions and continued consumer gloom, Richard Desmond's publishing and television media group Northern & Shell will report later this week that it more than tripled pre-tax profit to £30.3 million ($49 million) in 2010, buoyed by a transformation in the performance of its TV operations.
Despite a tough consumer market throughout the year, the privately owned media group combining OK! Magazine, Express Newspapers and U.K. terrestrial network Channel 5 will unveil an increase in revenue across the business of $167 million to $852 million when it publishes its trading statement later this week.
Desmond, who acquired the channel from pan-European media group RTL in July 2010 for $161 million, according to the filing, restructured the business comprehensively, taking out significant overheads, including virtually an entire layer of senior management. A combination of increased program investment, cross-marketing and investment in the on-demand TV platform YouView transformed Channel 5's profitability within three months. The network -- which airs CSI, NCIS and a raft of original programs, including The Gadget Show and The Hotel Inspector --will be making room in its schedule later this year for the return of Big Brother.
Desmond, whose media empire and philanthropic endeavors will be profiled in a CNBC documentary due to air later this week, said in the program that year-to-date revenue at Channel 5 was up 25%.
While the overall U.K. TV advertising outlook was down market four to six percent in May, Channel 5 executives were predicting an increase of 18 to 20 percent at the time the documentary was made.
ITV, Channel 5's market-listed rival, recently saw its shares downgraded after CEO Adam Crozier announced a negative advertising outlook down nine percent in May and lower overall in the second half of the year.
Northern & Shell did not comment on reports that it is looking at the possible sale of OK! USA to Time Warner in a deal that could value the celebrity magazine at almost $60 million. The sale, if it were to go ahead, would come after a year that Desmond has heavily invested in U.K. operations, including the acquisition of Channel 5, a deal to buy a new health lottery business to complement its media operations in the U.K. and costs of $86 million relating to cover price cuts at its newspaper business and restructuring costs relating to Channel 5.