'Irish Daily Star' may prove too hot to handle

BACKGROUND:Richard Desmond's Northern Shell may face significant hurdles if it wants to end a deal with INM

RICHARD DESMOND’S decision to take “immediate steps” to close the Irish Daily Star could bring to an end a 25-year partnership between Independent News Media and the British tabloid.

The row relates to the decision of the Irish Daily Star to republish photographs in its Saturday edition of the Duchess of Cambridge sunbathing topless.

The photographs had originally appeared in French publication Closer, which is being threatened with litigation by the British royal family.

About 120 people, of which about 80 are directly employed, work for the Irish Daily Star, based in the Dublin suburb of Dundrum.

It is jointly owned by INM and Northern Shell (NS), which Mr Desmond controls.

Latest accounts for Independent Star Ltd show it made a pretax profit of €4.3 million on turnover of €40.6 million in 2010. Its profits declined by 11.4 per cent that year.

Figures for 2011 have yet to be published but informed sources yesterday estimated that the accounts would show a decline in profits of between 8 and 10 per cent.

In 2010, the company paid a dividend of €4.55 million to INM and NS, which was up on the €3.9 million paid in the previous year. It operates under a licence from NS that expires in 2037.

It is understood that the contract allows the shareholders to give notice of their intention to withdraw from the joint venture.

Mr Desmond has threatened immediate closure but it is not clear if this is possible within the confines of the legal agreement with INM.

He certainly holds a strong hand, given that the British tabloid provides a lot of copy to the Irish title. This would be mostly sport, features and celebrity news.

Mr Desmond also controls the trademark on the Star name.

If the Irish title is closed, Mr Desmond could distribute the UK edition of the Star here.

In 2011, Independent Star Ltd ceased publishing a Sunday edition of the title. Since then, the British version has been distributed in the Republic.

Late last year, Desmond began distributing the British edition of the Daily Star in the Republic, in spite of opposition from INM.

He used a blue masthead as his agreement with INM precluded him from using the traditional red colour. This foray into the Republic was abandoned after just a few months.

There would be significant costs incurred in closing the Irish tabloid in terms of redundancy costs and other commitments, including the lease of its offices beside the Dundrum Town Centre.

There is also a printing contract with INM, which publishes the Irish Daily Star at its Citywest and Newry plants.

Desmond is a colourful character. NS was set up in 1974, publishing a single music title. In 1983 it acquired the UK licence to publish Penthouse, which led to a range of adult titles.These were sold in 2004.

It acquired Express Newspapers in 2000 from United News Media, which led to its involvement in the Irish Daily Star. It also publishes OK! magazine, which feeds off a diet of celebrity news and photographs.

Describing itself as Britain’s “leading independent publisher”, NS made a profit of £40.2 million last year.