Five's star treatment: The return of Celebrity Big Brother

The new series starts tonight, and while his big buy hasn't yet been a ratings hit, Richard Desmond is delighted. Adam Sherwin reveals how he's using the show and his media empire to build a stable of 'stars' that have sent his profits soaring

Sally Bercow is bidding to become MP for Brighton. Kerry Katona has a new job as a celebrity wedding planner. Amy Childs is running the beauty salon of her dreams. If these developments had passed you by then it could be because the D-list personalities and their daily exploits are the sole property of Richard Desmond and a burgeoning media empire, which is raising cross-promotion to a new art.

Following a year in which rival Rupert Murdoch has been humbled, Desmond, owner of the Northern & Shell group (N&S), is entitled to puff on a celebratory cigar at his Thames-side eyrie.

His £103.5m purchase of Channel 5 has begun to reap rewards with the revived Celebrity Big Brother eating into Channel 4's youth audience. The new series, which begins tonight, is set to give Reservoir Dogs star Michael Madsen and X Factor also-ran Frankie Cocozza a welcome career boost. A 2012 windfall is anticipated from Manchester's "big two" football clubs crashing into the secondary Europa League, which is screened live on the channel. The Sunday titles of his Daily Express and Star newspapers are thriving with circulation soaring by 23 per cent and 98 per cent respectively, following the demise of the News of the World. The former soft porn publisher's adult satellite channels continue to boost profits, which tripled this year, however uncomfortably they sit alongside Desmond's latest venture, a Health Lottery which the tycoon claims will deliver £50m a year to good causes but which is already under investigation by gambling watchdogs.

Latest figures show that revenues at Channel 5 are up 26 per cent to a record £350 million, boosted by a Big Brother-inspired 25 per cent increase in its evening audience. By comparison, the £550,000 that Express Newspapers paid to Gerry and Kate McCann for more than 100 libellous articles across its four titles is mere loose change.

But it is Desmond's ability to create his own stable of micro-celebrities, who star in bespoke Channel 5 shows, which are then plugged relentlessly through the pages of his newspapers and the company's weekly gossip magazines OK!, New! and Star, which is strengthening N&S's hand in the media marketplace.

As unlikely as it sounds, the model for Desmond's business is that pioneered by the late Steve Jobs. "We need to be a bit more like Apple," Nick Bampton, Channel 5's head of sales told a meeting of advertisers. "Apple leaves the low margin of manufacturing to others. Manufacturing is crucial but what really adds value is design and innovation."

For the iPad, read Amy Childs. Already a tabloid star, manufactured by the ITV2 reality series The Only Way Is Essex, she quit to sign a "360 degree" deal with Desmond. Childs was "laundered" through Celebrity Big Brother, a tainted Channel 4 brand snapped up by Channel 5 for £20m to serve an average audience of 2 million – despite Desmond's prediction of 20 million – alongside fellow contestants Bercow and Katona.

Childs then became a columnist on New! magazine, where she broke the news that she was about to star in her own Channel 5 series, It's All About Amy!.

The Express and Star papers, which placed Celebrity Big Brother on the front every day during its run, found plentiful opportunities to show the "vajazzle queen" in revealing outfits.

Bercow, who donated most of her £100,000 CBB fee to charity, has also extended her relationship with Desmond. The Speaker of the House of Commons' wife signed up as a columnist for the Daily Star Sunday. It's daily sister paper reported that Bercow "got on so well with (CBB winner) Paddy Doherty that she moved in with the 52-year-old gypsy for 10 days for a Channel 5 series called When Paddy Met Sally, due to air next year".

Inevitably, reality TV veteran Katona, whose £350,000 Big Brother fee staved off bankruptcy, is next to get her own 5 show. The Only Way Is Essex star Kirk Norcross is expected to be the latest beneficiary when he joins CBB.

Traditionally broadcasters would rake in cash by selling advertising across 30-second spots. But these "synergies" are part of Desmond's Apple-influenced plan to create cross-media deals with advertisers across his newspapers, magazines and Channel 5. N&S's commercial partners are even invited to have "editorial involvement" in the company's products, to ensure that they are closely tailored to the advertisers' target audience.

Paul Ashford, editorial director at N&S, told The Independent: "We have the advantage that we have one energetic shareholder and a very small board. We don't have a situation where our Sunday papers compete for stories and hack each other's phones. The newspapers, magazines and television, everything is co-ordinated. We are creating our own celebrities through Celebrity Big Brother. There is a lot of room for synergies.

"Now the advertising groups are getting into the programme funding business. It does enable us to make certain programmes where the agency can participate in the funding process and take money from the back end."

During Big Brother the arguing stopped for the housemates to watch the premiere of the film Paranormal Activity 3 at Elstree Studios, from a special Perspex box. OK! ran an advertorial spread about the premiere, footage

of which ran during Big Brother ad breaks, under a deal taking advantage of relaxed product placement rules.

Desmond, 60, began his career selling advertising space as a 16-year-old. But his intimate relationship with commercial partners, and a determination to throw the full weight of N&S behind any new venture, prompted complaints at the October launch of his Health Lottery.

Acevo, the Association of Chief Executives of Voluntary Organisations, said it had evidence that some supermarket managers had been instructed to give Health Lottery ticket stands at the expense of the National Lottery.

Acevo claims that Morrisons had ordered staff to move National Lottery stands to less prominent positions and place Desmond's tickets at store entrances where customers could see them.

Morrisons said it had not been paid "extra money" from the Health Lottery to move National Lottery terminals to less prominent positions.

Desmond's lottery, which gives 20.34p per ticket to good causes, compared to 28p from each £1 spent on its rival, is also under investigation by the Advertising Standards Authority (ASA).

The lottery received breathless backing from the Express and Star newspapers and the ASA is examining whether Desmond's stable ran advertisements under the guise of news reports.

But for Desmond, the lottery draw, broadcast live on Channel 5 on Saturday nights of course, is all about "helping the people of Britain, not an elitist bunch who go to the opera".

Mr Ashford said: "Is it kosher, is it legal? Of course. It was cleared by the regulator beforehand. It's only been going nine weeks but there's already 3 million people a week playing and charities are benefiting by £8m."

He adds: "It doesn't appear to have taken any business away from Camelot. They are still raking it in for their Canadian shareholders. [Ontario Teachers' Pension Plan bought Camelot for just under £400m last year]."

Often dismissed as a maverick outsider, notorious for ruthless cost-cutting at his acquisitions and firing broadsides at Paul Dacre, the Daily Mail editor-in-chief, Desmond may soon have to be taken seriously in the corridors of power.

A £1bn offer to Rupert Murdoch to buy The Sun was rebuffed in 2009. But with the future of the News International titles at the mercy of further phone-hacking revelations, the next offer Desmond makes could be too good to refuse.

"Drop me a line when you know what the price is," Mr Ashford said. "But The Sun is going to be tainted [by the hacking outcry] and we have The Star in that sector anyway."

When Jeremy Hunt, the Culture Secretary, announced a review of cross-media ownership rules, it was seen as an attempt to restrict Rupert Murdoch's ambitions. But it could easily be Desmond, with a mastery of cross-media promotion which surpasses anything attempted by News International and BSkyB, whose interests become a subject for scrutiny. "I don't think Richard gets the credit he could for his philanthropy, or for his wisdom and insightfulness," pleads Mr Ashford, who has worked with Desmond for 32 years. "When I interview people who work here, I tell them 'whatever happens, you are never going to get bored'."

Or as Desmond supposedly sang across the N&S boardroom after the purchase of Channel 5: "We've only just begun."