IN late 2000, as it became clear that Richard Desmond, publisher of OK! magazine and a string of porn titles, had become the frontrunner to buy the Daily Express, the financial press was in agreement: the deal would herald the flotation of his businesses the following year. Desmond succeeded in buying the Express. The flotation was forgotten.

Three years ago, in March 2004, at the height of his unsuccessful struggle to buy The Daily Telegraph, Desmond offloaded a company producing most of his top-shelf magazines. His business, it was said, was set to be floated. Three years on, that still hasn’t happened.

Now Desmond is widely reported to be looking at the idea of floating his highly profitable adult TV channels. He would retain a stake, but a stock-market share sale would allow him to fund expansion of other parts of his empire.

Investors would put their money into such money-spinning outlets as The Fantasy Channel, Red Hot All Girl and Red Hot 40+ Wives. But will this be yet another flotation that fails to get off the ground?

Desmond has recruited Sir Angus Grossart, chairman of the Edinburgh merchant bank Noble Grossart, to join the board of Portland Television, the company through which he controls his television channels.

Grossart, 69, is an establishment figure north of the border, having served on the boards of Royal Bank of Scotland, Scottish & Newcastle and Scottish Television among others. He is chairman of the National Galleries of Scotland and keeps a 16th-century castle near St Andrews as a weekend retreat.

He brings exactly the sort of gravitas to Portland Television that Desmond needs — if, indeed, the Express publisher really does intend to float the business. Grossart did not return calls last week.

Accounts for Portland itself give few clues about the state of Desmond’s television businesses: it is merely a holding company within the network of enterprises that make up the Desmond empire.

Portland Television is the parent of Lon-don-based Portland Enterprises, which provides “production and transmission services” to other companies controlled by Desmond and made almost £2m in 2005.

The bulk of the business controlled by Portland Television, the part responsible for Desmond’s television channels, is based in Jersey.

According to the 2005 accounts for Desmond’s master company, RCD1, broadcasting activities as a whole brought in operating profits of just over £10m. This was after knocking off a £2.3m loss for “broadcasting joint ventures”. The identity of the joint venture is not specified, but RCD1’s subsidiaries include a 50% stake in Express Shopping Channel.

So, on the face of it, Desmond’s TV businesses are profitable and might attract investors. But exactly why would he want to float the business at all? RCD1 is scarcely financially stretched: net interest payments in 2005 were less than £5m.

And without ever going near the stock market, Desmond has extracted huge sums of money from his businesses. He paid £125m for the Express group when he bought it from Lord Hollick’s United News & Media in 2000.

The following year, Desmond awarded himself pay of £4.5m, and some £3m was put into his pension. In 2002, he took no salary but £11m was paid into his pension.

In 2003 the really big payouts began. That year, his pay from the Express was £7.7m, while £26m went into his pension. In 2004, his pay was £32.6m plus £4.75m pension. And in 2005, Desmond took no salary but £23m went into his pension.

Add it all up, and Desmond received £112m in pay and salary from Express Newspapers from 2001 to 2005 inclusive.

If he took a further £20m in 2006 — rather less than he has done in recent years — his takings from the Express group will have topped £130m since he took control.

As the graph shows, the sales performance of the Express titles has scarcely been stellar. But for Desmond, owning the business has certainly been lucrative.

By taking so much from the Express, Desmond has kept its corporate tax bill down: after his personal takings have been removed, the Express’s profits have been minimal. Indeed, in 2005, Express Newspapers qualified for a £1.4m tax rebate.

Looking at the Desmond empire as a whole, over the five years to 2005, his total takings from RCD1 in the form of salary, perks and pension have totalled £155m.

But even Desmond’s declared takings from RCD1 fail to tell the full story. Small print in the accounts of companies under his control show that on top of the salary, perks and pension from his publishing and TV empire, he receives millions of pounds a year through his ownership of Express Newspapers’ head office in London.

In May 2003 Desmond bought 10 Lower Thames Street. He paid £28m compared with a valuation of £135m in 1989 when the distinctive, 12-storey blue-glass block was bought by merchant bank Midland Montagu.

Desmond then rented the building to Express Newspapers for £5.5m a year.

Ownership of the offices was transferred in June 2005 from Desmond himself to a partnership, Badger Property Partners, controlled by him and his wife, Janet.

In the 12 months to last April, Badger received £4.5m; after outgoings, it showed a surplus of £315,000.

But it is on the capital value of the building that Desmond has made a killing. At the time of the transfer, its value was put at £101m — more than three-and-a-half times the sum Desmond had paid for it.

And last July, an even higher price tag was put on the building — £141m. Furthermore, the annual rent paid to Badger by the Express group has also shot up: from £5.5m to £7.6m.

For Richard Desmond, Express Newspapers has been an extraordinary cash cow. The salary, perks and pension are big enough. The huge rent payments just add to the fortune he has extracted from the self-proclaimed “world’s greatest newspaper”.

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