A couple of days ago we reported on the plan by former adman Rupert Howell and journalist Sue Douglas to buy Richard Desmond’s Daily Star Sunday, a move that seemed odd in the extreme as newspapers are hardly booming in the UK (or likely to).
But, under Desmond’s ruthless cost management, the DSS does actually make money for the Northern & Shell tycoon – so why should he sell it?
Now it emerges that Desmond (left) is suing Credit Suisse for £50m, claiming it mis-sold him a complex derivatives product back in 2007 before the credit crunch cum financial crisis struck. According to the Financial Times, Credit Cuisse says he owes it £20m.
We don’t know exactly what was in this ‘product’ (nobody ever seems to apart from the bank, including Desmond in this case) but it seems to have included a number of investments in hedge funds. Usually, though, these things, only work when markets are going up. and when they go the other way (as they did big time in 2008) the consequences can be disastrous for unlucky investors (like Desmond). They’re rather like spread bets, you can win or lose a lot with a relatively small outlay.
As well as his newspapers and OK! magazine Dessie now owns Channel 5, which he seems to have turned round but owning a UK TV station up against the juggernauts of ITV, Sky and the BBC (a rival for audiences if not ad revenue) is an expensive business. Content is not free as it can be for newspapers where you can, if you wish, rewrite what you find on the internet.
At the time he made the ‘investment’ Desmond claimed he was worth £200m. He may now be worth more or less, depending on how much Channel 5 is deemed to be worth. But this isn’t all liquid cash but media assets that someone else may not want to buy.
So maybe Sue and Rupert have spotted a bargain after all.