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Maverick mogul boosts Channel 5

Richard Desmond has Brit web marching to his drumbeat

LONDON — As Rupert Murdoch’s star continues to fade in the U.K., tarnished by the phone hacking scandal at his tabloid newspapers, one of his more colorful rivals, Richard Desmond, finds his own ascending.

The eccentric 60-year-old Desmond, who keeps a full-size drum kit in the hangar-sized office of his Northern and Shell company, bought free-to-air commercial web Channel 5 from pan-European TV behemoth RTL in summer 2010 for £103.5 million ($161 million).

Before that purchase, Desmond, whose roots in publishing go back 40 years to music mags such as Beat Instrumental and Intl. Musician, was best known as a publishing mogul (he owns British newspapers the Daily Express, Sunday Express and Daily Star, as well as weekly gossip magazines OK!, New! and Star) and a purveyor of soft porn — his Portland TV subsidiary runs adult pay channels.

But last year, despite a U.K. economy that is at best flatlining, Channel 5 saw advertising revenue reach the highest in its 14-year history, up 28% to more than £350 million ($546 million), thanks to “Big Brother” and a stash of Hollywood movies and TV shows, such as first runs of “CSI.” RTL had been running the network at a loss. Last summer, Northern and Shell announced that a year after the takeover, Channel 5 was in profit.

Key to the improved performance is Desmond’s dedication to cutting costs. Around 80 jobs, more than 25% of the workforce including a cull of senior execs, were cut when he took over.

Desmond also knows how to sell advertising. His ability to cross-sell and cross-promote Channel 5 across broadcast, print and online in multimedia deals that advertisers find compelling has resulted in a business that appears to be growing fast.

Murdoch also uses his three remaining U.K. newspapers to plug his pay TV platform BSkyB. But U.K. media commentator Raymond Snoddy wouldn’t paint Desmond as a mini Murdoch.

“Desmond has very little feel for the media,” says Snoddy.”His talent is for making money and taking assets that other people undervalue and turning them into very valuable properties. Desmond has no interest in political power or social influence. He wants to run successful businesses.”

There is that measure of eccentricity, though. The maverick entrepreneur plays alongside the Who’s Roger Daltrey in a band, the RD Crusaders, which raises money for charities. And each afternoon, according to Snoddy, a butler dressed in full livery serves him a banana from a silver tray.

One trait he does share with Murdoch is an ability to keep loyal lieutenants onboard.

Northern and Shell’s editorial director, Paul Ashford, who has a doctorate in psychology and once interviewed pop stars for Desmond’s music titles, has worked at the company for 32 years.

“We have the advantage that we have one energetic shareholder and a very small board,” Ashford says, adding, “the newspapers, magazines and television, everything is coordinated. We are creating our own celebrities through ‘Celebrity Big Brother.’ There is a lot of room for synergies.”

Channel 5’s program director, Jeff Ford, who previously bought shows for the BBC, ITV and Channel 4, suggests there is nothing remarkable about Desmond’s Midas touch, other than his ability to identify with his audience.

“I don’t want to take anything away from RTL, but Northern and Shell is a British company,” he says. “It understands the market. It helps if you live here. Richard Desmond understands TV. He has got ambitions for Channel 5.”

These ambitions have been most evident so far with “Big Brother” and “Celebrity Big Brother,” which were losing their allure on Channel 4. By heavily promoting the shows in his newspapers, he has injected them back into the national zeitgeist, but skeptics wonder if Desmond will be able to sustain this over a period of time.

Not one to underpromote anything, Desmond joked that “Big Brother” would win 20 million viewers for the station. In fact, the show’s average was around 1.7 million, less than the 3.2 million Channel 4 was getting when it wielded the axe. But since Channel 5 has the lowest audience share of the five main terrestrial networks, it started from a much lower base than C4, and that 1.7 million number was enough to keep advertisers happy.

“Celebrity Big Brother” has done better for Channel 5, generating more than 2.6 million viewers. For a station that endlessly promotes its celebrities across all Northern and Shell media, this is no surprise.

Brasher and bolder than ever, these reality staples have brought a new, younger audience to the channel, and have helped foster a more fixed personality for the web. Former owner RTL had never settled on an identity for the web as program toppers came and went with regularity.

Other signature series on the network include factual entertainment shows “Cowboy Builders” and “Celebrity Wedding Planner”; U.S. drama “Body of Proof” is also performing well for Channel 5, while Hollywood movies continue to be a key part of the mix.

“As well as our entertainment shows, I’ve recently commissioned series on science, engineering and history, ” Ford says. “Richard is pouring money into the business.”

The exec believes that Channel 5 is still battling a perception problem as a racy, tabloid web and wants to see it make more impact with upscale auds, the kind that advertisers crave.

“In the past, there’s been some snobbery about 5, but people need to watch us and see how we are changing. A lot of our shows could play on the BBC, ITV or Channel 4,” Ford says.

Desmond’s acquisitiveness may yet push him further. With fledgling Channel 5 Prods. up and running, there is speculation that should Murdoch sell his remaining British tabloid, the Sun, Desmond would be unable to resist making an offer.

“A lot of people thought Desmond would turn 5 into a joke,” Snoddy says. “But now the joke is on them, because 5 is eating into their advertising revenues and he is playing the game by his own rules.”

And that’s not all he’s playing, according to Snoddy.

“After our interview, I asked him if he could play the drums. He duly obliged.”

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