Richard Desmond has sold Channel 5 to Viacom as Sky profits fall 8.5%

Viacom has reportedly paid £450m for the Big Brother broadcaster. Sky, meanwhile, is still being hit by its war with BT.

by Emma Haslett
Last Updated: 12 May 2014

It’s all go in broadcasting today: not only is Richard Desmond reportedly about to announce the sale of Channel 5 to Viacom, but Sky has posted third quarter results showing operating profits fell 8.5% in its third quarter as competition with BT heated up.

To Channel 5 first: Desmond, the man who proved it was possible to make Big Brother even less appealing than the version which brought us famous-for-not-being-famous celebrity Chantelle Houghton, will apparently make £450m from the sale, far less than the £700m he had been hoping for.

Viacom already owns MTV, Nickelodeon, Paramount Pictures and Comedy Central, so Channel 5 will be a drop in its ocean. Most importantly to anyone with under-5s, it has also invested in the production company that makes Peppa Pig, which is shown on Channel 5.

The deal is expected to be announced by Viacom today or tomorrow - although how well the broadcaster will fare without Desmond’s rather aggressive strategy of cross-platform promotion (he owns the Express and the Daily Star, in which he vigorously pushes Channel 5) remains to be seen.

And so, to the surprisingly resillient BSkyB and its trench warfare with BT: the broadcaster said revenues were up 7% to £567bn, but that because it had to pay more than usual for Premier League rights (partly due to a bidding war with BT), operating profit dropped to £910m, compared with £994m during the same period last year.

There had been whispers from analysts that the number of new satellite subscribers might finally start falling (if they did, it would be the first time in 15 years) - but chief executive Jeremy Darroch said there were 74,000 new subscriptions in the quarter. ‘They were wrong,’ he added, with a rather satisfied air.

To be fair, given the way TV consumption is going, it’s inevitable satellite subscriptions will go the way of the dinosaur eventually - but Sky seems prepared for that. Sky Go, its online streaming service, had 3.7 million unique users, 13% up on last year, and it attracted 70,000 new broadband customers - so it’s not like the internet is passing it by. Although that figure is less than half last year’s 152,000, which Darroch blamed on bad weather and engineers having a backlog of work.

Investors seemed relaxed, though: BSkyB share price rose 3.26% this morning. So for the time being, its standoff with BT hasn’t done any lasting damage.

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