Next Gen News

• Desmond plans to invest £1.5bn over five years
• Up to 80 jobs to go in £20m cost-cutting drive
• Five can return to the draft Canvas

Channel Five has lost seven of the nine directors of the executive board in a brutal select Control as the new owner Richard Desmond is looking to reduce 20 million pounds of business.

Five staff were informed at a 10am meeting today of the changes, which will include a £20m cost-cutting drive and up to 80 job losses â€" more than 25% of about 300 employees.

However, through Northern & Shell, Desmond plans to invest about £300m annually in Five over the next five years in a bid to "go toe-to-toe with the biggest players in the TV world".

Dawn Airey, the Five chairman and chief executive, will be among those leaving, as revealed by MediaGuardian.co.uk yesterday. Airey will not leave for several months and is moving to a senior role at Five's former owner, RTL.

Airey is understood to have been invited to stay five years, but decided to switch to RTL, the pan-European broadcaster, which owns the Thames in London, reviews the manufacturer Apprentice and Britain 's Got Talent.

Among Five's nine senior executives, only the managing director of digital channels, Jeff Ford, and the sales director, Kelly Williams, will remain.

Richard Woolfe, the Five director of programmes, is leaving, with Ford taking over the role. Woolfe joined Five from Sky1 in April last year and has been trying to introduce more new and original talent during his short tenure, but has been working with a limited budget for original programming.

Ford has in-depth of experience in acquisitions, having previously been head of acquisitions at Five at its launch in 1997, Channel 4 and ITV.

The other senior executives departing are Five's managing director Mark White, director of legal affairs and company secretary Paul Chinnery, corporate affairs director Sue Robertson, director of strategy Charles Constable and finance director David Hockley. The head of HR, Natasha Adams, is also leaving.

Woolfe, Constable and Robertson will depart at the end of the month. White, Hockley, Chinnery and Adams are staying until the end of October to work with Airey on integrating the business with Desmond's Northern & Shell.

Many of the directors have been at Five for years, some since its launch, and are well respected in the TV industry.

Desmond, who acquired Five last month in a £103.5m deal that was more than double the next closest bid, is looking to make savings of about £20m â€" £9m from staff cuts and £11m from overheads.

One source described Desmond's cuts as a "bloodbath" that will "change Five for ever". "Think what he did at Express Newspapers and then keep on going some distance," said a second source, referring to the cuts Desmond made at Express Newspapers after buying the publishing business nearly a decade ago.

In a statement today, Northern & Shell said: "The savings aim to realise efficiencies deriving from Channel Five's integration into the Northern & Shell group of companies and at the same time develop an ambitious new investment plan that will see the channel go toe-to-toe with the biggest players in the TV world. Long-term financial input in the field of £300m per year for the next five years is planned by Northern & Shell.

"This is the first of many initiatives that will see a new streamlined Channel Five make enormous strides over the coming years. One area of particular importance is that of Project Canvas and the amazing possibilities it opens up for the future for viewers."

Airey said: "The day Five was sold, my job was done. I will be returning to the RTL Group but over the next few months will remain in post with a number of my senior colleagues to facilitate the integration of Five into Northern & Shell.

Desmond added: "Whilst I'm sorry to see Dawn move on, I'm thrilled that she'll be in the mix to contribute to the various exciting plans we have and oversee the acquisition and development of brilliant new content."

Theoretically, the cost-cutting could bring the loss-making broadcaster back to profitability, after Five posted an operating loss of €10m (£8.3m) last year .

However, the scale of the cuts will be tough for Five staff, who last summer had to endure a redundancy programme that saw close to one in four roles cut. Consultation with those affected by the latest redundancies will begin immediately.

The channel's employees were also informed that they will be moving offices from Covent Garden to Desmond's Northern & Shell premises on Lower Thames Street in the City and Docklands.

There are also due to be the merging of back office functions such as IT, finance and human resources between the businesses.

Five is also expected to become more of a vehicle for promotion for Northern & Shell's other assets, which include OK! magazine and Express Newspapers.

According to one source, Desmond believes that his cutback programme is much less severe than what might have been enacted by another buyer less willing to inject funds into the operation.

Desmond, who has said he is "so rich it is ridiculous", believes that a restructure under another buyer from within broadcasting would have led to potentially only 20% of staff remaining due to massive role duplication and the scrapping of entire operations such as TV sales.

He has pledged to top up Five's total budget to about £1.5bn over the next five years â€" including new investment of £50m to £100m a year to boost programming, which was cut back by about £55m during the downturn last year .

He has also said that the equivalent of £20m in media space will be given over to promoting the broadcaster and its shows in a marketing campaign in his newspapers and OK! magazine.

Desmond said the five would not be taken downmarket, which will increase public content services such as news and current affairs, and he looked up the name of a large acquisition programs such as Big Brother and significantly increase channel 's share TV ad revenue.

Overall Channel Five group, which includes digital services Fiver and Five USA, reported losses of €41m (£34m) last year with €22m in programme writedowns. Operating losses were €10m. TV ad revenues fell 21% year on year to €303m.

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