Desmond papers to nearly double profits in two years

Richard Desmond is considering selling off his four newspaper publications in order to support his vision for Channel 5, and Barclays Capital has given any prospective buyer something to think about, predicting that his papers are set to nearly double thier profits in the space of two years.

To gauge what kind of valuation the Daily Express, Sunday Express, Daily Star and Star Sunday would command, the bank has put together an optimistic-looking two page document predicting that earnings (before interest, tax, depreciation and amortisation) will increase by more than 80 per cent. In financial terms, that’s a leap from £31.7m in 2010, to £60m in 2012.

The prediction does take into account an increase in operating margin, but according to the Guardian, “excludes a £12m annual payment to the company’s final salary pension scheme”.

Desmond has long been criticised by the likes of the National Union of Journalists for the bloodthirsty cuts he has made to his papers in a drive to make them as profitable as possible. And the current ‘will he/won’t he?’ question around the sale of his papers has also split observers. The Guardian reports: “Some see it as an opportunity to get out of a declining market,” while on the other hand “others believe that a sale would work against Northern & Shell’s (Desmond’s company that owns Channel 5) strategy of maximising revenue by cross-selling advertising across its magazine, newspaper and television assets”.

While a deal isn’t on the table as of yet, and is something that unnamed Guardian sources have said has a “minimal” chance of happening, the fact that he’s gauging valuations suggests he’s giving the idea a fair bit of thought.

(Source: MediaGuardian)

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