Richard Desmond received £20m of shares in the UK’s largest newspaper publisher Reach Plc, as part of his £200m sale of the Daily Express and Daily Star in 2018. He has now sold the shares for £62.5m, a beneficiary of Reach’s surging share price.
The sale is effectively a farewell to the media industry from Desmond, the rags-to-riches, pleased-with-himself Brit who made a billion by upstaging established media leaders. Across the past 40 years, he scored big against the odds. Look at his record:
1966: Leaves school at age 15 after an impoverished, lonely adolescence, living with his mother above a garage. Sells classified ads for Thomson newspapers by day, and plays the drums in jazz bands at night. By 21, he owns a house and two record shops.
1974: Starts Northern & Shell and combines his music-advertising interests by launching International Musician & Recording World which, for 17 years, was a pioneering magazine. Before Dennis and Future had really begun to exploit the international licensing potential of specialist magazines, Desmond had launched editions of International Musician in the UK, US, Australia, Japan, and Germany.
1983: Obtains the UK licence for Penthouse, as a springboard to developing his first major profits from adult and special interest magazines.
1993: Launches Ok! magazine as a (fairly) shameless copy of Hello! which had hit the UK in 1988 (44 years after its pioneering launch in Spain). After a stuttering start as a monthly, OK! goes weekly in 2006 and scales 600,000 circulation before falling way back with weekly magazines everywhere. It profited from Desmond’s gutsy exploitation of cheque book celebrities and their weddings. OK! once claimed to be the world’s largest celebrity magazine with 20 international editions.
2000: Buys the faded Express Newspapers from private equity buccaneer Clive (Lord) Hollick for £125m, much of which was quickly recouped from asset sales. Most observers were sceptical of Desmond’s chances of restoring profits to the once-legendary newspaper group and assumed that, if Hollick couldn’t sort it out, nobody could. But even in an era of sharply declining fortunes for daily newspapers, the Express titles managed to increase turnover by £15m (7%) in 2011 while sharply reducing costs.
2004: Sells his adult magazines for £10m. Retains adult satellite TV channels, including Television X.
2010: Pays £104m to acquire Channel 5, the UK’s struggling third commercial TV network from CLT (Bertlesmann). The channel had failed to make a profit in its first 13 years, and managed to lose CLT £36m in 2009. The sceptics were out in force again to predict that, now Desmond was in the big league of media, he had bitten off more than he could chew. But he quickly lopped £12m off annual costs (mostly by slashing senior jobs) and flipped the channel into profit in his first full year. It was not exclusively about cost-cutting. He increased young audiences by revitalising Endemol’s “Big Brother”. In 2011, Channel 5 made operating profit of £26m on revenue that had surged 23% to £353m. In 2015, he sold it to Viacom for £450m.
2011: His Northern & Shell company reports post-tax profits of £40m – 30% up on 2010, on revenues of £688m that were 40% ahead, despite heavy investment in his National Health Lottery.
2018: He sells Express Newspapers (along with his celebrity magazines) to Reach Plc for a total price equivalent to 15x pre-tax profit. With the 2021 shares windfall, that multiple becomes a whopping 18x.
That is how Desmond grew a major UK media business – against the odds – by taking on the challenges of high-profile competitors. He had relentlessly climbed the media ladder from small specialist magazines through big international weeklies, daily newspapers and to network television. It was this route that gave him a sharp eye for cost-cutting and the confidence to challenge media market orthodoxy. That, and his devil-don’t-care attitude, gave him a reputation for aggression and ruthlessness. And the swearing helped.
He relished the notoriety of his well-publicised Nazi tirade against Axel Springer executives which successfully deterred the German company from buying the UK’s Daily Telegraph (and, with it, a printing JV with Desmond). Mission accomplished.
He has always enjoyed being under-estimated and has not cared much about a personal reputation splashed with muddy anecdotes. He seemed to thrive on it all, shaking hands on deals with comments like “Now you have done a deal with the Devil…”. But he actually succeeded through high-energy, a determination to prove sceptics wrong, and an unmistakeable flair for media content and promotion. The success of OK! and turnround of Channel 5 owed much to Desmond’s clear-sighted understanding of his audience and (for all the bluster) his concentration on the things that mattered to readers and advertisers. He seems not to care that his energies (as drummer in a star-studded, special-occasion rock band) and large donations to charity have been lost in the noise. But he has always loved the show.
Richard Desmond’s sale of his Reach Plc shares signals a farewell to media from the man who once enjoyed snarling metaphorically towards his sworn rivals from his office balcony over the Thames: upstream to Rupert Murdoch’s News UK and, downstream, to the Daily Mail’s Lord Rothermere.
He is now devoting much of his energy (and at least £20m in cash) to campaigning for the UK’s lucrative National Lottery whose license is up for grabs; and to a small town he is building on the Thames-side site of his former printworks. Goodbye.
