Richard Desmond quits board at Channel 5 in new sign broadcaster is to be sold
Friday 21 February 2014
Richard Desmond has resigned from the board of Channel 5's operating company in a further sign that he is preparing for a possible sale of the broadcaster.
The media mogul and two other senior executives quietly stepped down from Channel 5 Broadcasting Limited at the end of December, according to Companies House filings.
Mr Desmond's team has sent out a detailed information memorandum, including Channel 5's financial data, to would-be buyers and is thought to have set a 27 February deadline to make initial offers.
In a separate move, the regulator, Ofcom, yesterday formally confirmed that Channel 5 and ITV have completed the renewal of their broadcasting licences for another 10 years until 2024 – a symbolic move which will give confidence to any potential bidder for Channel 5.
Mr Desmond, who also owns the Daily Express, Daily Star, OK! magazine and adult TV channels, surprised the City when it emerged last month that he had hired Barclays to look at a sale of Channel 5 for as much as £700m.
He paid £103.5m cash to buy the broadcaster from the European giant RTL just three and a half years ago.
Mr Desmond's Northern & Shell group declined to comment on the board changes or sale process.
Northern & Shell is thought to have received interest from a string of potential buyers.
The American giants NBC, Turner Broadcasting, Discovery and Scripps, owner of UKTV, have all been mooted.
However, observers reckon any sale could take several months and it is far from clear whether Mr Desmond can get the price he wants or if he will end up selling.
Indeed, Enders Analysis has said that "negotiations are likely to be far from straightforward in spite of markedly improved profits" at the Big Brother broadcaster, which struggled to break even under RTL.
The analysts said it was "unlikely" that existing UK players such as BSkyB, BT or ITV would mount a serious bid.
"The strongest interest is likely to be from overseas," said the TV research analyst Toby Syfret of Enders.
He estimates that Mr Desmond has boosted operating profit at Channel 5 to as much as £70m a year, to give a £700m valuation of 10 times earnings.
Big Brother has performed well and Channel 5 briefly overtook Channel 4 in the ratings last summer.
In addition, the TV advertising market has bounced back since its nadir in 2009, despite the rise of the internet.
But Mr Syfret suggested that Mr Desmond has benefited from his ability to cross-promote the broadcaster in his newspapers and magazines and that another owner could miss out on such "massive free publicity".
Mr Desmond's other media assets are not thought to be for sale, although Barclays sounded out interest in his papers and magazines in 2011.
Northern & Shell is also reported to have received an approach for its Health Lottery.
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