Richard Desmond: 'David Abraham views me as his Big Brother'
Richard Desmond, self-made media mogul and owner of Channel 5, gave his first address to the television industry at Cambridge University today, touching upon rivals, YouView, being an outsider and rock 'n' roll. Read his full speech below.
Richard Desmond: addressed the television industry at Cambridge University
Ladies and gentlemen, thank you for inviting me here today. It is an honour to be made to feel so welcome. Those of you who know me will know that I'm not really one for making speeches.
But – somehow – my good friend David Abraham has managed to talk me into doing this one. And he's even got me playing the drums with my young band tonight, The RD Crusaders. I don't know how he does it. I'll admit it David, since you asked me back in May, I've had a few second thoughts. But – as all my friends will tell you, when I say I'll do something for a mate, I do it.
So David, mate, I am doing this one for you like I said I would. It's good to be able to do things together – isn't it?
Now, you might think of Channel 4 and Channel 5 as natural competitors – always battling it out for audience share. But I don't. Over the past three years I have come to think of us as friends. And I think David does too. You know something? I think he looks on me as his Big Brother.
It's a funny thing, when a guy who left school at 14 to be a rock and roll drummer is asked to give a speech at Cambridge University. And it's even stranger when you think that this afternoon I will be at Corpus Christi – where my son studied – to talk about setting up a Scholarship Fund.
If I had gone to one of these great universities – I wonder if I would be speaking here today? Or playing the drums with my band later tonight? I am not sure. I worry that this kind of structured education means you become structured in your thinking. And that affects how you approach taking risks.
And maybe – you don't take them. I run a small media company now called Northern & Shell. And since some of our businesses are heavily regulated, life is somewhat structured. But, it is fair to say that over the last 40 years we have also taken risks and gone into areas no one else dared. In fact, our company motto is Forti Nihil Difficile. That's been our motto since 1975.
For people who didn't go to Cambridge, what it means is: "to the brave, nothing is difficult." At every step, there was always someone more powerful than me, who thought it would be easy to put me out of business. They told me that I would never succeed. That my team were the wrong sort of people. And that someone like me should never be allowed to run things.
I can tell you today what I tried to tell them at the time: I'm not going anywhere. I do what I say I will do. And when I buy something, it's because I know I can give it a future.
I don't plan to bore you with the story of my whole career. But since some of you may have heard stories about me, I thought you might like to see how it looked from my point of view. My Northern & Shell journey started in 1974, when we launched International Musician and Recording World.
Sometimes I come out of meetings today thinking that I must be pretty naïve. But in those days at the ripe old age of 23, I was even more naïve! So when Spotlight Publications – which owned Sounds, Record Mirror, Kerrang and a few other newspapers – said they would distribute International Musician to the newstrade, I was happy to accept what the boss said.
Off we went, merrily putting the magazine together and selling all the advertising. Then, three days before printing, I received a letter saying they weren't going to distribute. I had to rush around all the other companies, trying to find someone else who would take the magazine on. All the other distributors, including IPC, who published Melody Maker and New Musical Express at the time, refused do a deal.
Eventually, a tiny husband-and-wife company called Independent Magazines agreed to be my distributor, and we finally got going. We launched on time.
Unfortunately I didn't understand about credit terms then. So I gave them 90 days. On the 90th day they told me they were going into receivership.
Luckily, I found another distributor, and International Musician went on to do very well. So we started a second magazine called Home Organist. We were a bit worried about the ethics of publishing a magazine that promoted music that wasn't proper rock 'n' roll. But by then, I had realised I could expand beyond music magazines. So we went into the computer area with a title called Next.
Around that time, the publishers of a magazine called Penthouse were looking to get rid of their loss-making UK business, so we took the rights. Some of you who were teenagers in the eighties may remember it.
I would love to be able to tell you that running the business was all about beautiful women hanging off my every word … Maybe I went about things the wrong way … !
The reality was that it was a very difficult time, with my competitors very upset that I had dared to enter the market at all.
Between Paul Raymond – who was the king of adult magazines then – and my printers, who were on his side, they tried to kill the business in every way possible.
First, they overcharged me and became very aggressive on extras on invoicing. Then, they changed my credit terms and demanded money that I didn't have. Finally, they threatened not to print the next edition, and that nearly put me out of business.
So, I had to find another printer in a hurry. But, you know something? By then I had learned what to do.
We went on to make Penthouse a success and went on to launch and buy, many other magazines. More or less, that sort of struggle has been the story of the past 40 years. There were lots of times when we had our backs to the wall. But we always found a way of getting through. We never gave up.
Among the people I must thank for helping me along the way are: The owners of Hello!, who couldn't have been more welcoming; the warm and cuddly Clive Hollick; the selfless Conrad Black; And most recently, the extremely charitable Dianne Thompson.
Of course, now that the Big Brother House is a National Trust home, I am looking forward to a cheque from Dianne and the National Lottery to keep the décor up to scratch. It's a heritage site after all."
Without these guys, I probably wouldn't be here today! I tried to tell them that I would do what I said I would do. But I don't think they believed me.
Forty years on from International Musician, I am lucky enough to run a group of businesses that I love and that I am proud of. And our readers and viewers are proud of them too. The markets I operate in are stronger because my companies are there.
That is my measure of success. Whether it has been magazines, newspapers, lotteries or television, what matters to me is that I have brought growth and stability to the overall sector. Otherwise, what's the point?
So, it's good to be here today. Now, what you want to hear about is: How I see Channel 5's role in the television community.
What has happened since I bought it. And how I am doing business in the changing media world.
It's just over three years since I bought Channel 5. I know you will find this hard to believe – but at the time, my entry into the posh world of public service broadcasting wasn't universally welcomed. But, when I look at this audience today, I see a great many people who have become friends and partners of Channel 5. And it is down to those friendships and partnerships that we owe our success. So thank you.
I can see the production companies we work with, who help us make programmes that people talk about and care about. I can see advertisers and agencies who help us get more money on screen. I can see my friends from the US studios. US drama has a very important place on Channel 5. That is why I go the extra mile to be at Mip or the LA Screenings. And it's why I'm on first name terms with so many of the studio people in this room.
Channel 5 really gets behind US acquisitions, and we support them across our whole portfolio. We've proved that. We don't perform Sky Atlantic-style magic on them – and make the audience disappear!
It's good to be able to take the opportunity to thank my friends and sparring partners from around the YouView boardroom table. Actually, not all my sparring partners seem to be here … I do hope none of them got fired. YouView is an adventure, though. And I don't just mean our board meetings. Giving viewers the power to choose what they watch and when they watch it, without a big monthly subscription fee, has huge potential. We are only just getting underway.
And whatever you may have heard, Alan Sugar did a very good job at getting the boxes designed and ready and all the YouView shareholders recognise this.
It's good to see all my fellow public service broadcasters here. We compete, of course, in many ways. But we all stand together to protect the future of Public Service content. And that's why television is going through a new golden age. I will come back to that.
I can see my friends from Sky. Blimey, what a success story Sky has been! Whatever else is said about Rupert, he has built the biggest success story in the history of television. And he did it without a penny of public money. This industry would be much smaller if it weren't for his determination. And his refusal to quit. True to himself, he is still refusing to quit!
You know, I'm really looking forward to showing him around the neighbourhood when he rents a cost-effective new location for his newspapers in the Baby Shard – just across the river from me. Before you ask. Yes, his building is bigger than mine.
But I can live with that. And anyway, I own my own building. One hundred percent.
Now, Channel 5 has many more friends here. But I don't want to use up my time going through everybody. You know who you are. I am happy that Channel 5 is a strong partner in the television community. Channel 5 works much better now because we go the extra mile to make sure that our partnerships work. Just like with my magazines and newspapers, we always find a way to get the impossible done.
Now, I started this speech by telling you how I bought Channel 5 three years ago.
The other thing I see in this room is a lot of people who could have bought Channel 5 instead. That's fair to say, isn't it? Believe me, it was up for sale. Let's not forget: when Northern & Shell bought Channel 5 from RTL, it had lost around a billion pounds in 13 years. It was losing share, losing advertisers and losing money. I know Gerhard has been a great friend to the RTS, over many years. He has also been a great friend to me.
When we did the deal, he gave me some very good advice, which I have followed. And it has helped us transform the channel. I know he never wanted to sell Channel 5. He had the foresight. It's just a shame the previous owners didn't let him execute on his vision.
But wasn't that Channel 5's problem?
If the clever TV experts who ran some of Europe's biggest channels couldn't make Channel 5 work, maybe no-one could?
It's a funny thing, but I always thought I could make Channel 5 work. Like Gerhard, what I saw was a great broadcaster with great potential. And I knew that my team would be able to pull it together.
Let me tell you about when we were buying Channel 5. The way it happened was that my finance director had to get a bank draft written out. It was a draft for £103.5m pounds. When you hold £103.5m in your hands – and it is money you have worked decades to make – you look at the piece of paper and you really do question the decision you are about to make.
So I passed the bank draft around the table in our weekly management meeting. And I asked each person if they thought we should do the deal … or if we should put the money back in the bank. Sounds like a good idea for a gameshow! I asked my editors, the circulation team, the ad sales team and the commercial team: did they want me to commit the company to £103.5m pounds upfront, and, more importantly, to funding an annual budget of over £300m? And that was before our purchase of Big Brother.
It was a big moral and financial responsibility. Because if it went wrong, we'd all be living under a park bench!
Someone pointed out to me recently that, when you add it all up, my board and I have spent more than 130 years working together. To give you some idea of what that means, there are only five of us. And then there are my editors and lawyers and my commercial team. Something must work, because we have all been together for quite a long time. We know how to work together and deliver the results we need.
So, the draft went to everyone sitting around the table. Everyone agreed that we could do it by working together. THEN we did the deal.
It wasn't until a few weeks later, when I had toothache – probably brought on by the stress! – that the scale of the decision really hit me.
I was at my dentists in Mill Hill East. I used to go to Hebrew classes with him many years ago. As I was about to leave he said, 'did you really write out a cheque for £103m?' And I said 'yes.' And he said 'just like that? Out of cash?' And I said, well:'yes.'
And that's when I really thought about it. And realised what a responsibility I had taken on. I had to make a difference to the channel.
It's not the first time we've had to make that kind of decision. We did the same thing when we were building OK Magazine. It took us six years to make a monthly profit. That was a point when we were really struggling. Christ we were struggling! The magazine was losing a million pounds a month. But I still had to pay out seven figure sums for celebrity exclusives we needed. I called the whole company together and said: 'Look, either we continue, but live with austerity throughout the company. Or we sell it and give up." The vote to keep on going was unanimous.
So, we went on investing, and trying to move things along. Then one day I made a telephone call and met up with a very nice young couple. Their names were Victoria Adams and David Beckham.
They came to the office in Docklands, and I said: why don't we work together, and together we can help make you the new King and Queen of Britain." He laughed. And she said "how?" We did a series of features, culminating in their wedding issue, which had over two million sale. We were out of the shit. And we never looked back. And that was the birth of brand Beckham.
So how is Channel 5 doing three years on? Well, our focus is on quality television and growing our audiences.
Ben Frow, our new director of programmes, is very clear in his vision. And passionate about commissioning the kind of intelligent, populist programmes that you can't switch off. But he tells me that he doesn't want formulas or gimmicks or shows about people with Ten Stone Testicles. And that he won't be chasing ratings with television that is cruel and predictable. Ben's vision of Channel 5 is about building our own talent, telling great stories and being populist and proud of it. And I agree. So I say to him: 'Ben, you're the boss.'
Public service content is very important to Channel 5. We have worked very hard on news with our partner ITN, and have also built a fantastic new studio at Lower Thames Street. For the first half of the year, Channel 5's News at Five averaged an audience of around 630,000 viewers. That's just 40,000 behind Channel 4 News. And well ahead of the 613,000 who watch BBC2's Newsnight. You won't be surprised to hear that we have punched above our weight.
Last year I told the culture secretary, Maria Miller, that we would continue our commitment to children's programming throughout the term of our ten-year licence extension. As the father of a two-year old daughter who likes to get me up early, I often have the chance to check that we are getting it just right on Milkshake, our children's strand. I am already excited about the return of The Wombles.
I won't take you through all our great shows, but there are a few that I'd like to point out: This Christmas we will have The Bible – the Mark Burnett adaptation that took the US by storm. It's a different way to look at religion and it will get people talking. Under The Dome is a fantastic drama. And we have new history, new drama commissions, and of course Big Brother. In performance terms, you may have heard that we have been doing well.
It isn't only Channel 4 that we are doing well against. We are also doing well against BBC2, and are just about a share point behind. And when we get within reach of ITV in peak I get out a very big cigar. I'd like a few more very big cigars.
But, however much the PSBs like to compete, all of you here are all aware that some very big bets on the future of television are being made by platforms which don't have any PSB obligations at all.
BT, Virgin and Sky operate in a way that is not conceived of by the current system of regulation. And giants like Google, Amazon and Apple, who seem to rule the world, don't even fall within the scope of regulation at all. I do worry that the playing field is leveled against those of us who are trying to protect public service broadcasting. The commercial PSBs face limits on advertising minutage that are far too restrictive and need to be changed. We want a level playing field for all channels.
At the same time PSBs should be able to charge pay-TV platforms for the benefits that come from offering the UKs most popular channels.
It is important enough frequencies remain available so everyone can receive a full range of free-to-air channels".
I have one message for every policy person in this room: It is easy to jeopardise the future of public service broadcasting. But impossible to recover from.
Let me say that again. It is easy to jeopardize the future of public service broadcasting. But impossible to recover from.
I am fine with regulation where it is fair and flexible. But – if it limits growth, stops us being strong and able to compete which ultimately fails the viewer, then in my view it is wrong. So, to sum up: I hope I have been able to set out a bit about how I see the future for Channel 5. We believe we are doing a good job and are showing results. We will continue to make significant investment in the future of Channel 5.
Now we need your support – whether as partners or media buyers or regulators.
I know that as a private company and sole shareholder, I am an outsider and that I do things differently. Sometimes that takes people by surprise. Let me tell you, everything feels different when every pound you risk is your own. I have around two thousand people on the payroll, most of them with families. And I have a lot of pensioners who are living long and healthy lives. Even longer than the actuaries predicted! So, if I fuck it all up, they won't be happy.
I don't have the cushion of a licence fee, or shareholders I can turn to when times get tough. That is why I am so careful, and always keep an eye on cashflow. I would love to be able to spend a hundred million pounds on a digital upgrade plan, and if it didn't work, shrug my shoulders and move on. And I would love to be able to make people who leave my company into multi-millionaires as a goodbye present. As some of you may have found out, that isn't the case.
Of course, as a private shareholder, you always look wistfully at the way markets can drive success. But in the end, I have always decided that being independent was the best choice for me. If you are an outsider, it is better to remain in control of being that way. I would like to think that over the years, outsiders have made a pretty good case for showing that we can transform industries.
Perhaps you will judge for yourselves. I love the businesses that I own. I am proud that they are stronger under my ownership. There were some brilliant years when I took out quite a bit of money. But now I get paid the average salary at Northern & Shell, and that's fine.
The amount I give to charities is what I am happy to focus on.
You know, it's funny when you've enjoyed material success – that something often comes along to put things into perspective. Ten years ago I developed a very serious eye problem: acute angle glaucoma. The doctors tried to treat it with drops. But after six months they told me that I'd have to have an operation and that I might lose my sight. I could go blind.
So there I was, on the operating trolley, being wheeled down the corridor at Moorfields Eye Hospital, and I was very nervous. I found that I was having a conversation with myself. What was my eyesight worth? Would I give £100m to charity to save it? Yes. Would I give £200m? Yes. Would I give up every material possession: my house, my office, my magazines and newspapers?
Luckily, I never had to answer this question, because the next thing I knew, I was waking up with my vision fully restored. But the question didn't leave me. In fact, I have thought about it ever since. On my next check up I found the surgeon working in horrible cramped conditions and I wondered how they managed to cope.
I said to the doctor "Why is it so bad?" And he said: " The thing is, we are trying to save money to fund a new children's eye hospital." I said to him: 'You know something? You don't have to try any more.'
And that's how I came to fund construction of the Richard Desmond Children's Eye Centre at Moorfields. It's a state-of-the-art eye centre, which we built on a brand new site, and it treats more than 25,000 children a year. And considering what I had been prepared to part with – I got out cheap! My band, the RD Crusaders, have raised more than £14m for charities over the last decade. And I want to thank the likes of Roger Daltrey, Robert Plant, Lulu, Gary Moore, Gary Brooker, Sam Browne who have all been part of the band.
Together with Russ Ballard, Steve Smith, Greg Lake, Zoot Money, Nikki Lamborn, myself and Dave Howman – who you will hear later tonight – we have helped charities like the Teenage Cancer Trust, MacMillan Nurses, the Evelina Children's Hospital, Norwood and many others.
The Richard Desmond Charitable Foundation, which is separate, gets more than a thousand letters and applications for funding every year. There are big projects, like humanitarian aid relief in Africa, or the Bomber Command Memorial in Green Park, which the Queen opened last year. But there are many more small projects that I try to visit as well.
Let me tell you – watching premature babies struggling for life in the Evelina Hospital, or travelling to the Ukraine to witness appalling conditions of deprivation and oppression – that really keeps you in touch with the hard realities of our world. Almost a thousand local community health projects have now been funded through The Health Lottery, another of our businesses. I'd like to tell you about all of them, but I don't think I have the time!
To sum up: I hope this gives you some idea of who I am. I am sorry I am not here talking you through my company's grand five-year strategy plan.
Our five-year plan and five-minute plan are the same: To grow our businesses and make them work. To work with like-minded people along the way. And to seize every opportunity. Without going broke.
We are enjoying the experience of becoming part of the television community. And – just between ourselves – it is by far the friendliest industry I have ever operated in. So I am looking forward to the future. And I will see you all tonight – for a bit of fun and rock 'n' roll.
No jackets required.
This article was first published on mediaweek.co.uk
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