On the face of it, the takeover of Channel Five by Richard Desmond for a price of £103.5 million is a great example of two well-matched parties ending up with an agreement that suits both of them. . However, dig a little deeper and it would appear that Five’s owners, RTL, have got the better of the deal, by exploiting their “coinage” more effectively than Desmond.

“Coinage” is the currency used to make deals. Any win/win deal requires that the underlying needs of the parties to be met.  These are not just the outward expressions of what the parties say they want (things like price, delivery and quantity) but the underlying needs that drive the parties.  “Coinage” consists of concessions which have a high value to the receiver (because they meet one of these personal needs) but a low value to the giver – to whom they are the equivalent of loose change..

Looking at RTL’s needs in the negotiation it is not difficult to detect a need for “security”. Five has been shipping cash for some time – caught in a bind between falling ad sales, lack of scale and lack of funding to create original programming or expensive acquisitions. Its value has been written down by almost £400 million in the last two years. It lost £9.1 million last year and it has only 8% of the TV ad market. This cannot have been comfortable for parent company, RTL, part of the Bertelsmann family. And it certainly does not fit with Bertlelsmann’s normal, cautious approach to business.

[pullquote_right]“Coinage” is the currency used to make deals. Any win/win deal requires that the underlying needs of the parties to be met.[/pullquote_right]

From Richard Desmond’s point of view the “need” being transmitted loud and clear is a “belonging” need. Here we have an ambitious and successful Publisher with a well-known background in adult publications who probably wishes to join the club of “serious” Media owners. Adding Channel 5 to the Sunday Express, the Daily Star and Ok! Magazine makes him arguably one of the most significant Media owners in the country, and gives him the chance to create an E! Style channel based around showbiz and celebrity shows.

So, whatever Price was initially demanded for the sale of Five, it should  not in theory have been difficult for Richard Desmond to reduce that in return for accommodating RTL’s underlying security need to staunch the out-flow of cash. His “coinage” would have been an ability to make that pain go away instantly, based on the fact that he is a cash-rich individual, reputedly worth some £950 million.  Equally, RTL had some powerful coinage as well – it could accommodate Richard Desmond’s underlying desire to “join the club” of serious Media players. Its coinage would have been have been that it held the entry ticket for that club – albeit a rather scruffy one which brings admission only to a poor seat at the major broadcasting table.

So, who deployed their coinage to greater effect? Well, it surely must be significant that RTL put Five up for sale at £100million, and that is pretty much exactly the price Desmond paid for it. Moreover his bid was apparently twice that of his nearest competitor.  A good sign of coinage being well deployed is that one party ends up obtaining more of what it wants, because it uses its coinage to meet a high value need on the other side, and obtain what it needs in return. RTL would seem to have used the lure of media ownership to maintain a far higher value for Five than the market would otherwise have been prepared to accept.

Desmond may be very happy with his purchase, but it’s probably RTL who are laughing..