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Desmond proves TV still offers rich returns for the few remaining risk-takers

Last week's sale of Channel 5 to Viacom for £450 million represents a fantastic return for Northern & Shell's owner, Richard Desmond, who acquired the broadcaster for £103.5 million four years earlier.

Arif Durrani, head of media at Campaign, editor of Media Week

Arif Durrani, head of media at Campaign, editor of Media Week

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The knockers will note it fell considerably short of his £700 million asking price, but even they must acknowledge it is more than double the £200 million many had foreseen.

Wily Desmond has once again stepped into a very competitive arena and proved that his ability to slash costs, understand a brand’s core values and leverage group assets can yield fantastic returns.

There can be little doubt "Dirty Des", much maligned for his legacy porn mags, has won the respect of fellow broadcasters. Securing the £200 million five-year deal with Endemol for the Big Brother franchise was the biggest gamble of his career, and proved to be the perfect springboard upon which a revitalised C5 could rise.

How Viacom integrates C5 with the content and sales of its MTV, Viva, VH1, Comedy Central and Nickelodeon channels remains to be seen. The US company already enjoys a strong relationship with satellite giant, BSkyB, with its Sky Media sales operation believed to be generating more than £100 million in ad revenues for its channels. 

It’s notable the Big Brother licence is up for renewal in 2015; whether it is extended will provide a clearer indication of Viacom’s strategic direction.

C4 is struggling to match the audience highs of the Paralympics, but it continues to forge a distinctive path

Last week's deal will have kept editors of The Sunday Times’ Rich List, due to be published next week, busy. Desmond was the third-richest media figure in the UK last year, with a fortune valued at £860 million. The 62-year-old can expect to be pushing the £1 billion barrier now.

Elsewhere, Channel 4 unveils its 2013 report today (Thursday). Alongside the ritual rubbernecking at Jonathan Allan’s salary – yes, still considerably more than your average bear – is likely to be angst about its dual public-service broadcaster and commercial role.

Sources suggest C4 is set to post double-digit losses, following a £29 million shortfall in its Paralympics-fuelled 2012 results. But beyond the topline figure is a "born risky" company that continues to invest some £430 million in original programming.

While struggling to match the audience highs achieved during its coverage of the Paralympic Games in London, creatively C4 continues to forge its own distinctive path, including the likes of Gogglebox, Educating Yorkshire and Southcliffe, as well as agenda-setting news output, as typified by "Plebgate".

So, do we want a brave, experimental Channel 4, trialling new formats and providing alternative perspectives that are susceptible to producing just as many misses as hits, or do we want a safer bet with a portfolio of more sure-fire audience pleasers? I know my preference.

Commercially, C4 is expected to have again surpassed £1 billion in sales, with ad revenues staying largely flat last year. Yet few advertisers will argue the broadcaster does not provide a valuable route to otherwise hard to reach, younger audiences. It will be fascinating to see if C5’s sale to the MTV owner has any impact on the marketplace.

This article was first published on campaignlive.co.uk

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