Cost cutting by new owner bears fruit
LONDON — U.K. terrestrial web Channel 5 is making an operating profit — less than a year after Richard Desmond’s Northern and Shell bought the loss-making broadcaster from RTL.
The company, which also owns OK! magazine and British newspapers the Daily Express and Sunday Express, has announced a hike in overall revenues driven by a strong showing at Channel 5.
Northern and Shell said it “took just three months to turn losses at the terrestrial broadcaster it bought for £99.1 million ($161.7 million) into a healthy operating profit.”
Overall pre-tax profits for 2010 tripled from £8.9 million ($14.5 million) to £30.3 million ($49.4 million) on revenue of £524.8 million ($856.5 million), an increase of £103.3 million ($168.6 million) on the previous year.
Channel 5’s perf was the jewel in Northern and Shell’s crown, said the company, whose maverick chairman, Desmond, gives a rare TV interview in a profile to air on business web CNBC in the U.K. on Wednesday.
The acquisition of the terrestrial web, completed last July, enabled Northern and Shell to attain synergies across its media interests.
Channel 5 has made an operating profit since last September following a program of hefty cost-cutting involving job losses, which saw most of its senior team, including CEO Dawn Airey, ankle.
The broadcaster’s hit shows include the “CSI” franchise.
A source at the web indicated that it intends to remain a key U.K. player in the U.S. acquisitions market.
In April, Channel 5 confirmed that it had bought U.K. rights to “Big Brother” following protracted negotiations with Endemol.
With £91.7 million ($150 million) of cash on the balance sheet, Northern and Shell, claims it is “well placed” for future growth.
Finance director Robert Sanderson said: “The significant step changes we have made to the business in the last year leave us well placed to further improve our financial performance and to build on our broader media interests.”