UK’s Northern & Shell media group may sell Channel 5 for £700 mn

British media baron Richard Desmond's Northern & Shell group may sell Channel 5 TV station for approximately £700 million ($1.15 billion), three years after taking over the business, according to the Financial Times.

Citing sources, the paper said that Barclays is advising on options including a possible sale for the television network early in the new year.

Desmond acquired a struggling Channel 5 from Europe's largest broadcasting group RTL for £103 million in 2010, becoming the first individual to control a public service broadcaster in the UK.

Since his taking over, Desmond revamped the business and appointed new executives. The TV network now runs popular programmes such as Big Brother.

While a sale of Channel 5 would fetch a hefty profit for Desmond, there is no guarantee that he would proceed with the sale.

For a buyer it would provide a strong foothold to enter the UK's entertainment market.

Potential buyers could include local rival ITV and US network operator Turner Broadcasting.

The group earned an operating profit of £20.6 million in the first half of 2013, compared with a loss of £16.1 million for the same period last year.

Public service broadcasters are enjoying revival of the advertising business after the economic downturn. ITV's shares have jumped ten-fold since 2009 as revenues surged on the back of recovery in advertising.

According to some estimates based on ITV's stock valuation, Channel 5 is worth around £400 million. However, it is expected that Desmond would look for a price in excess of £700 million, about 10 times the network's anticipated earnings before interest and taxes this year.

The source said that there is no guarantee that the process would lead to a sale. Three years ago, Desmond had asked Barclays to value its newspaper business, but decided not to sell it.

Northern & Shell said, ''As a media group with a broad portfolio of assets we are often the subject of speculation, but it remains our policy not to comment on these matters.''

London-based Northern & Shell, established in 1974, is a publishing and television group. It publishes Daily Express and Daily Star newspapers, magazines OK!, New!, Star and owns three entertainment TV channels: Channel 5, 5* and 5USA.

However, Channel 5 has so far failed to reach a dominant position in the UK. Its share of weekly viewing is below 4 per cent compared with BBC1's 22 per cent, ITV's 13 per cent, BBC2's 5.8 per cent and Channel 4's 5.2 per cent, according to December 3rd week figures from TV rating firm Barb.