The MT Interview: Richard Desmond
By Chris Blackhurst Wednesday, 01 December 2010
The proprietor of the Express and OK! - and now Five - is one of the most divisive figures in the British media. The self-styled outsider admits that a third of his staff probably loathe him, yet his wide-ranging work for charity and hopes of owning the Sun and the News of the World reveal someone who wants to join the elite.
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There is something spookily unsettling about the top floor of the Northern & Shell building in the City of London.
Located next door to the old Billingsgate fish market, it used to be the home of Midland Montagu until that bank was subsumed by HSBC. All blue glass on the outside, it's also modern on the inside - until you reach the highest level, occupied by Northern & Shell's chairman, Richard Desmond.
Then, you come out of the steel and glass lift, to be confronted by a deep-carpeted foyer and a dizzying array of closed, unmarked wooden doors. It's quite weird - are there rooms behind them, who is there, what do they hide?
The uniformed butler leads me to a door that is identical to the rest. But on the other side is what must rank as one of the most spectacular offices I've ever seen. There's a desk at one end and a meeting table at the other, and a sofa in-between. However, substantial as they are, they seem lost in a room that is positively huge, extending the entire width of the building, and against a backdrop that takes in the length of the Thames in central London, from Canary Wharf and Tower Bridge in the east to the London Eye and the Houses of Parliament in the west.
'Christ, it's enormous,' I volunteer, 'it must be among the world's biggest offices.' 'I should hope so,' says Desmond, merrily puffing on a cigar.
Few people in British business arouse such strong feelings as Desmond, 59. He's the north London cloakroom attendant who started trade magazines galore, then moved into porn before becoming a billionaire, with OK!, the Express newspapers and, recently, terrestrial TV channel Five.
He's known for his aggressive, in-your-face manner. He swears a lot, shouts often and screams frequently. His behaviour has aroused numerous legal disputes - the latest, involving the author Tom Bower, which he lost, heard how Desmond threatened a fund manager, saying: 'I'm the worst fucking enemy you'll ever have.'
He has a banana delivered by his butler on a silver tray twice a day and rings a bell in meetings when someone makes a good point and blows an old-fashioned car horn when it's bad.
And he did imitate Adolf Hitler in a meeting with Daily Telegraph executives when it seemed as though their paper was to be bought by the German publisher Axel Springer.
Yet he's also the major charity supporter who has the children's eye unit at Moorfields hospital named after him, heads the Jewish welfare organisation Norwood and with his rock group, the RD Crusaders - featuring himself on drums and usually containing the likes of Roger Daltrey and Robert Plant, has raised millions for good causes.
I briefly worked for Desmond. I was deputy editor of the Daily Express when he took over in November 2000, so I can vouch for his sometimes confrontational approach, punctuated constantly by four-letter words.
But he can also be quiet, well mannered and, yes, considerate and charming. He's not a big man, not imposing. He's slight of build, testament to a strict dietary and fitness regime. (He used to be overweight and bearded, then underwent a dramatic conversion.)
There's no denying, either, that for all the controversy attached to him, he has achieved considerable business success. OK! far outsells Hello! and is now a worldwide magazine. He repaid the money he borrowed to buy the Express titles within months and the Daily Star has gone on to increase its readership massively under his watch. And, while the Express titles do not earn critical plaudits and he's accused of not investing in them, their decline is no more marked than that of other papers. Now he's got Five.
He paid £104m to RTL for the terrestrial channel. 'Truthfully, we were the only people who could do it, because of our knowledge of the British market in terms of news, current affairs, celebrities and advertising sales - we've got an instinctive feel for the British market. When we bought Channel 5, I took the draft agreement into a meeting of all our editors, of the Daily Express, Sunday Express, Daily Star, Daily Star Sunday and OK!, for them to read. They all said: "Blimey." I said: "If we buy this channel, we've all got to be together. We've got to fully integrate it - which is the only way it will work."'
In its final year with RTL, Five ran up a loss of £34m. 'It's lost about that amount each year for the last 15 years. (It's actually only 13 years old.) It cost RTL £650m in losses and over £1bn in total because RTL bought out the minority shareholders, United (News & Media) and Pearson. We bought it at the end of July. Through September, October and into November we're already making an operating profit.'
How? 'The station has revenues of £270m and was losing £34m. We've taken exactly the same figure, £34m, of costs out. We've saved £10m on staff - some of the directors were heavily paid and getting high bonuses even though it was making a loss.' He pauses and shakes his head at this. 'We cut £14m off one programme alone - we said this is the price we're paying and that's it - and £10m came from cutting general overheads.'
'Furthermore,' adds Desmond, 'we will have in-creased advertising income by £80m, so our total revenues will be £350m.'
So far, little has changed for viewers. Desmond will begin to make his mark on the programming side from January.
Listening to the treatment dished out to the station, you can feel for the shell-shocked staff (I well re- member the day he cancelled all payments leaving the Express and refused to acknowledge any invoices until a case was made as to why they needed paying).
There are those in the refined reaches of broadcasting who regard his entry into mainstream TV (he's had porn channels for some time) with horror, I say, fearing that he will turn the station into a tawdry celeb fest, cross-promoting with his newspapers and possibly worse. He can't be happy about that? His lips curl. 'We will turn round Channel 5, same as we did with Express Newspapers. It will be quick. We know what needs doing, we know what we want and we get on with it.'
He doesn't apologise for his no-holds-barred approach. Quite the contrary, as the opposition usually comes from those who aren't risking their own money. 'Anybody who runs their own business would do exactly what I do - if they didn't, they wouldn't run their own business for very long.'
Desmond pauses. 'I do walk around every bit of the building, I do speak to every member of staff, I do want to know what is going on. I like to feel this is a business in which the people know me. When you include company pensioners, 15,000 families rely on me, which is frightening. I only started in business in 1975 to look after my mum and now I've got 2,000 employees, 9,000 freelancers and 4,000 pensioners, plus newsagents, production companies and all the ancillary workers, and people in the US - all depending on me. Next year, we will do close to £1bn in sales. I like to say we're a real private company, not a private equity company. There are no other shareholders. Not many private companies in Britain are bigger than us.'
He gets up from his chair and paces around. 'I apologise if we seem overaggressive and overabrasive, but if we don't get this business (Five) sorted out quickly there won't be a business. Remember, I was the only genuine bidder for Channel 5. Okay, Channel 4 wanted it and tried to buy it, but it was only buying it for bandwidth.'
He has been like this, he says, ever since he was 15 and had his first job selling advertising space for Thomson publishing group. 'Somebody said then I was aggressive. I wanted to sell more advertising than anyone else.'
He's relighting his cigar. 'The fact is, my editors and senior people have been with me a long time. This is a private company - there's no Big Brother watching over us, there's nobody I can turn to for a rights issue. When OK! was failing between 1993 and 1996 and we lost £20m, that was everything I had in the world. I could see the house going. I wanted Michael Jackson's baby's pictures. He wouldn't sell. I offered $1m, then $1.5m. I had a banker's draft sent to him in LA for $2.1m and I got it. That was my money. It was one of the turning points for OK!.'
But what about the tales of staff having chairs and filing cabinets thrown at them? 'They're all make-believe, they never happened.' (Not strictly true - Ted Young, an Express executive editor, was successful in his claim for damages against Desmond in 2004 for physical assault.)
What about the Express papers? In snootier circles they're derided for their lack of award-winning journalism - is he content with that? 'We don't even enter the awards or go to the dinners. I hear all that, but we're outsiders. If I was an insider, I'd think I'd failed.'
This is not entirely correct. Tonight he is off to Manchester to address a charity event and among charities he's regarded as establishment - in demand for his cash and for his business acumen. 'That apart, I'm an outsider,' he acknowledges, correcting himself.
Has he always been an outsider? 'Yes, from not being good at school onwards. I couldn't see why you had to know what the capital of Ethiopia was or why you had to learn woodwork. I enjoyed English and maths, which I suppose is reflected in what I do now, in media.'
He grew up in north London. His father was managing director of Pearl & Dean, the cinema advertising company. But what money his father had went on gambling and his parents divorced.
While young Desmond hated school, he discovered a lifelong love for drumming. A friend rejected a bar mitzvah present of a drum kit and Desmond bought it. He was 14 and set his heart on becoming a drummer in a band. He worked in the cloakroom of Manor House, the north London venue that hosted Georgie Fame, Jimi Hendrix and John Mayall & the Bluesbreakers. 'Then I heard Eric Clapton play. I remember thinking, fuck this, I've found it.'
School slipped away. He had a Saturday job at Woolworths and he picked up a set of drums used by Bill Bruford of Yes. Desmond ditched school completely, leaving at 15, and joined Thomson, selling ads during the day for its trade magazines and playing the drums at night at gigs.
'My first pay packet is out there, framed on the wall,' he says, gesturing towards the office door. 'It was eight pounds, seven shillings and tuppence a week and I got an increase on my 16th birthday.'
At work, the competitive streak kicked in. As he says: 'I don't know why, but I just wanted to sell more advertising than anyone else.'
He launched International Musician and then a raft of music magazines, and they in turn spawned a whole group that embraced journals in fitness, computing, cars, stamps and cycling and, after he obtained the UK licence to print Penthouse, porn.
He's brooding now. 'Yes, I am an outsider,' he says, not letting it go. 'I'd guess a third of my staff love me, a third hate me and a third don't know who I am. Which is okay. My charities, the causes I support - they all love me.'
He rattles off his charities and it's a long list. He talks excitedly about his RD Crusaders group and playing with Daltrey and Plant.
When did he last play? 'Saturday night. A pal came round and we just played.' He frowns. 'I am good but I am not great. But, there again, having played with the world's best, it's difficult for me to play even with the semi-pros. As fellow band members go, they don't come better than Greg Lake, Roger Daltrey and Robert Plant.'
He's in reflective mood. Would he do anything different, if he could? 'I often think about that. With my music mags I was always trying for 100%. If I'd accepted 80%, I'd be far ahead of where I am now. Actually,' he adds, beaming and leaning back with his cigar, 'I'm very happy.' (He's about to become a father again. He has a son, Robert, via his former wife Janet - they divorced in October - and is expecting a child in February with his new American partner, Joy Canfield.)
What about the porn (Asian Babes, Horny Housewives, et al), does he now regret it? He hesitates. Perhaps he does but, if so, he won't admit it. He fixes me with a stare. 'First of all, it's not "porn", Mr Blackhurst. It's adult magazines that were sold through the same distribution channels as all newspapers and other magazines. It was all regulated. It was honest.'
His eyes narrow. 'Do you know, Richard Branson said "don't sell 'em" when I sold them six years ago. Sir Richard Branson! But the market had gone, I got a good price - otherwise I would have kept them.'
He'd rather talk about how Northern & Shell covers all manner of publications. 'Looking back, it's been fantastic,' he says, moving on. 'What's great is that we've had the same management team all the way through,' citing how long his senior executives, Martin Ellice, Stan Myerson, Robert Sanderson and Paul Ashford, have been with him.
The Express first crossed his radar as far back as 1993, he claims. He'd done some business with United News & Media and could see it was badly managed. 'I felt quite sick. I could not believe its management. They were directors of a public company, drinking wine, while we were negotiating. We'd then return to our office in Docklands, work hard and have a cup of tea.'
Desmond pursued Lord Hollick to sell it, until Hollick in 1998 sent a letter saying: 'Stop sending your emissaries to see me. The Express is not for sale.'
Why the Express? 'I'd always taken it. My father was a circulation rep there. It was a British institution.'
He was determined to get it, even securing, he says, the backing of Commerzbank in 2000 to make a full bid for United. The plan was that the other titles would be sold, leaving Northern & Shell with the Express papers.
In the end, he didn't need to bother. Desmond bumped into Hollick at a Spurs versus Arsenal game. He could see him across the executive suite and decided to approach him. 'It's like dating. You've seen the girl, you've got to make up your mind to go for her.'
First though, Danny Fiszman, then an Arsenal director who was with him, gave Desmond a helping hand. 'We had a rule on OK! that every member of staff had to survey newsagents at the weekend to see how well we were doing. I went into mine and he told me that Danny's wife had switched from Hello! to OK!. I sent her a personal letter thanking her. Danny went up to Hollick and said: "He'd do a great job with the Express." Hollick asked: "Why's that?" Danny said: "Because he knows everyone in the country personally who buys OK! and writes to them."
Soon after, word got out that Hollick was looking to sell. 'He was talking to the Barclay twins, to the Hinduja brothers.' He laughs. 'I couldn't have that. I decided to ride to its rescue - I was like a knight on a white charger. I said I could offer around £100m and I could move quickly and quietly. That appealed to him. Four weeks later, the papers were ours.'
He bought them in November and by June the loan from Commerzbank he used to pay for the titles was repaid. Taking the costs out, he maintains, was straightforward. 'For example, I was invited to go and see Tony Blair in Downing Street. I got in a cab that was lined up outside the Express. The driver had already got £21 run up on the meter. I said: "Who is paying for this?" He said not to worry, the rich bloke who'd just got the paper would settle it. I said: "Look in the mirror.'" He shakes his head. 'Stopping the cabs sitting outside the offices alone saved us £250,000 a year.'
Channel 5, he claims, was the same. 'One of the senior executives - I'd better not say who - employed a cab driver full-time at a cost of £50,000 a year plus Sky subscription and medical insurance.'
In 2009, he took on journalist Tom Bower in court.
Desmond sued him over an implication in Bower's biography of Conrad Black that he interfered with his papers' editorial stance and that he'd rolled over when faced by Black. The result was a libel trial in which Desmond was portrayed as a 'malevolent' newspaper baron who would tell lies 'at the drop of a hat'. His reputation was described in court as the worst 'of any proprietor since the second world war'.
The jury took only four hours to find in Bower's favour. Does Desmond wish he'd ignored the offending paragraph? Hardly. 'I won that case conclusively because I showed I don't order my editors to write things and I didn't give in to Conrad Black. The fact the jury thought Bower was right and I was wrong, I don't care.' Desmond may be putting a brave face on it, but he seems to revel in the exposure.
Is Five the end? 'No. What we do next will be in media.' Top of the shopping list, it seems, is the Sun and News of the World. 'A year ago, I walked into Rupert Murdoch's office in New York with £1bn in my pocket. I said I wanted to buy News International for £1bn. Rupert said he didn't want to sell but he acknowledged it was a good offer.'
Desmond regards the rebuff as a challenge and he hasn't given up on Murdoch's papers. 'I normally get what I want, I'm patient.'
It's time for him to have his picture taken. On cue, the door opens and the butler appears. He puts down a banana on a tray in front of his master and leaves.
FOUR CHALLENGES FACING DESMOND
To transform the fortunes of Five and to create a fully integrated media group
To convince a wider audience, not just those people that he gives money to via charities, that he is a serious, long-term player who knows how to nurture and expand businesses as well as take money out
To polish a reputation badly damaged by the Bower libel case and to reveal a more caring side
To persuade Rupert Murdoch to sell him the Sun and the News of the World
DESMOND IN A MINUTE
1951: Born in London, went to Christ's College, Finchley
1967: Left school at 15, was a drummer in a band, worked at Thomson selling advertising
1974: Launched International Musician magazine, which led to a whole stable of titles in leisure, music, hi-tech, fitness, cooking, cars and cycling
1983: Secured the right to print Penthouse in the UK and created a top shelf's worth of pornographic magazines
1993: Founded OK!, now the largest weekly in the world, outselling rival Hello! by three to one
2000: Bought Express Newspapers
2010: Purchased Five from RTL and began turning it round