Case study: Five
After months of speculation over the future of terrestrial TV channel Five, publisher Richard Desmond has paid Luxembourg-based RTL £104m for the broadcaster because he sees value in the struggling media brand.
The future of the channel – RTL is majority owned by the German media conglomerate Bertelsmann – as a standalone business had been in doubt for more than a year. In March 2009, Bertelsmann chief finance officer Thomas Rabe said Five’s business model, hit by the advertising downturn and the rise of multichannel TV, was not sustainable.
However, Desmond, who used to own a stable of adult magazines, such as Asian Babes and Horny Housewives, recognised potential in the brand.
He says: “We bought Five because it is a great broadcaster. Led by chief executive Dawn Airey, Five has shown enormous creative vision and business acumen during the most difficult time imaginable for the economy. It has proved itself to be a credible and competitive British broadcaster.”
Desmond has the money and resources to invest in its growth. He is chairman of publisher Northern & Shell (N&S) and owns OK! magazine and Express Newspapers, which are being used to promote Five. In the week following his purchase, OK! and each of the supplements that come with N&S’s daily and Sunday newspapers carried an eight-page promotion for Five and its programming line-up, which is thought to equate to £20m worth of marketing spend. “That was something Five wasn’t able to do under the previous owners,” adds Desmond.
He hopes to build on the success of shows such as CSI, Neighbours, Home & Away and The Mentalist by investing between £50m and £100m in the channel’s schedule over each of the next five years. However, Desmond claims it will remain committed to news and UK-originated programming.
Although the brand will continue to operate in the same way, there will be a change of name with Five reverting to its previous moniker of Channel Five. It is also likely that the network will join Project Canvas, the proposed internet-connected TV platform. Five has also signed a major deal with YouTube to make its full-length programmes available free and on-demand.
“With the right investment, drive and leadership, it can go from strength to strength as a competitive broadcaster and a modern player for the digital consumer,” claims Desmond.
Three brands that failed second time around
1 Nova magazine:
Women’s magazine published by the then Mirror Group between 1965 and 1975 that tackled serious issues, as well as fashion. It was revived in 2000 by IPC at a time when the women’s magazine sector was becoming increasingly crowded. It folded again in June the following year.
2 Nestlé Texan bar:
A chewy nougat bar manufactured in the Seventies and Eighties. It was brought back for a short period in 2005 following a wave of confectionery-related nostalgia.
An iconic fashion store during the Sixties and Seventies that was founded by designer Barbara Hulanicki, but fell into financial difficulties. Dorothy Perkins and Dennis Day bought 75% of it, but after disagreements with the board over creative control Hulanicki left the company and in 1975 BIBA shut down. The brand was sold to a consortium that opened a store in 1978, but it closed less than two years later. The BIBA label was relaunched again in May 2006 under designer Bella Freud, but ceased production after just two collections.
Four questions to ask before saving a lapsed brand
- Is the brand alive in the minds of the modern consumer?
- Has the brand had an iconic status or a leading position in the past?
- Can the brand be made relevant for the modern consumer?
- Does the brand fit with a company’s existing portfolio?
Source: Intangible Business