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Mogul grounded: Richard Desmond gives up his jet deal

Media tycoon's company pays £1m to cancel his order for a £36m private jet after drop in profits

The company owned by media mogul Richard Desmond has paid almost £1m to cancel an order for a £36m private jet in a sign that even tycoons are feeling the economic squeeze.

The owner of Channel 5, the Daily Express, Daily Star and OK! magazine, abandoned plans for the corporate aircraft as newly published accounts for his Northern & Shell group showed annual profits before tax slumped to £5m in 2011, down from £30m a year earlier.

Mr Desmond, known for his blunt language, ordered the company jet in 2008 and had been making staggered payments ahead of delivery in 2017.

But the press baron, who told The Independent two years ago that "I've got so much money it's ridiculous", has now had second thoughts.

The accounts say: "During the year, the Group decided not to take delivery of the aircraft, incurring liquidated damages of $1.5m."

Northern & Shell confirmed that it lost the sum, equivalent to £968,000. A spokesman said: "Given the requirements of the group and in the light of the economic climate, we decided to cancel the order. There was a downpayment, some of which was returned and the rest was not. We sold OK! in America last year and felt it was not the right time to go ahead [with the plane]."

But Northern & Shell did not lose all the money it had paid in advance for the jet as it received $3m back.

The company declined to say what aircraft it had been planning to buy but it said in 2008 that it had ordered a G450 Gulfstream jet, which can fly eight passengers 4,350 nautical miles. At one stage, Mr Desmond was reportedly looking to purchase the superior G650, which can fly even longer distances.

The Daily Express proprietor's decision to buy the private jet came as a surprise because he declared in an interview in 2005 that he didn't like the idea of flying to the Mediterranean for the weekend.

Mr Desmond said at the time: "I like to ride my bike on Sundays. I can't stand all that b*******, Harry's Bar s***. Private jets are b*******. I like to hire one if I need to go somewhere. I piss away £100,000 a year doing that. I enjoy every one pound of it. And I don't need a boat. I have enough mates who have boats. It's all b*******."

The accounts for Northern & Shell, which owns all of Mr Desmond's media businesses, including his adult TV channels and The Health Lottery, showed revenues increased to £713.6m against £524.8m a year earlier, thanks in part to his acquisition of Channel 5. There was no dividend.

The firm's balance sheet was hit by an exceptional charge of £46.6m to cover the liability for an undisclosed potential insurance claim.

Profits after tax fell to £40.3m against £52.5m a year earlier. "The directors feel that the group is well placed to build on its established activities," said the accounts, which said operating profits at Channel 5 had risen sharply while Express Newspapers was "broadly similar" despite "tough trading conditions".

The Sunday Times 2012 Rich List estimated Mr Desmond's wealth at £1bn, up from £950m a year earlier. He hosted a big party to celebrate his 60th birthday last year.