Richard Desmond buys Channel 5
LONDON (Reuters) - Media baron Richard Desmond has bought UK broadcaster Five from European broadcasting group RTL Group for 125 million euros (104.4 million pounds) in cash.
Desmond, the publisher of OK! celebrity magazine and the Daily Express, was the frontrunner to buy the broadcaster, which owns one of the UK's five network TV channels and two digital channels.
"I am delighted to have taken ownership of the network, and know 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," Desmond said in a statement.
RTL, which aims to be number one or two in each of its markets, put Five, the UK home of soap opera Neighbours and crime drama CSI, up for sale because it trails the BBC, ITV and Channel 4 in audience share.
"With a significant recovery of the UK TV advertising market and Five performing well in the first half of 2010, we saw a window of opportunity to realise a transaction based on a fair evaluation of Five," RTL Chief Executive Gerhard Zeiler said in a statement.
The British television market has been hit by a slump in advertising spending, and Five has struggled to compete with ITV, Channel 4 and a host of digital channels chasing the same ad money.
Five and its two digital channels had around 8 percent of the television ad market and just over 6 percent of adult viewers.
RTL, which is based in Luxembourg and majority owned by Germany's Bertelsmann, has written down the value of Five by over 400 million pounds in the last two years.
Analysts said Desmond, who bought the broadcaster through his Northern & Shell company, could try to use his OK! title in conjunction with the new purchase, by adding shows based around the celebrities who appear in the magazine.
The channel could also bid to air the Big Brother series, which is set to end on Channel 4, they said.
The acquisition could attract interest from the regulator as on top of OK! and the Daily Express, Desmond also owns the Daily Star newspaper, other magazines and a range of pornographic television channels.
"There must be a reasonable possibility that (Business secretary) Vince Cable will use his powers under the Enterprise Act 2002 to require an investigation into whether Mr Desmond's purchase reduces plurality," Enders analyst Chris Goodall said in a note.
"And second, whether the Five takeover by this proprietor might reduce the range and quality of UK broadcasting."
Desmond, who is worth around 950 million pounds, according to the latest Sunday Times Rich List, bought the Express titles in 2000. Critics have accused him of cutting costs to the detriment of the newspapers.
(Reporting by Paul Sandle and Kate Holton, editing by Will Waterman)
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