Desmond to unveil profit at Channel 5 in first year
Monday 13 June 2011
Richard Desmond's media group Northern & Shell will reveal today that Channel 5 made a profit last year. The news comes just a month before the anniversary of the ailing channel's acquisition by Mr Desmond in a deal worth £103.4m.
Northern & Shell, which also owns the Express newspaper group, is set to release its latest trading figures today. The numbers will show that the company tripled full-year pre-tax profits from £8.9m in 2009 to £30.3m last year.
The biggest surprise is that Channel 5, which the company bought in July last year, quickly turned profitable.
Channel 5 had struggled under its previous owner, RTL, losing €41m (£36m) in 2009. Yet the operation added £16m to Northern & Shell's gross profits last year.
Mr Desmond's company spent £11m on restructuring the broadcaster after sealing the acquisition, the majority of which was laid out on redundancy payments.
The company also had to pay £1m for Channel 5 to be released from its lease on its headquarters in London's Covent Garden.
After scrutinising Channel 5's assets, Northern & Shell also decided the company's inventory was overvalued and wrote it down by £10m in its accounts.
The company said the broadcaster had been running at an operating profit since September.
Robert Sanderson, the finance director of Northern & Shell, said: "The significant step changes we have made to the business in the last year leave us well placed to further improve our financial performance and to build on our broader media interests."
Turnover at the group, which also owns OK! magazine, rose by £103.3m to £524.8m "despite a background of recession and low consumer confidence", a spokesman for the company said.
Express Newspapers was forced to take a hit of £43m after promoting its titles through cover-price reductions and discounts.
The company said Channel 5 "complemented its newspaper publishing, printing and magazine businesses, enabling it to attain synergies through its expanded media operations".
Northern & Shell recently also bought The Health Lottery, which will launch later this year. The company added that despite its spending, it was in good financial shape with £91.7m of cash on the balance sheet at the end of the year.
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