STV quadruples divi as ad market pushes profit

Rob Woodward hailed success of the two city  stations. Picture: John Devlin
Rob Woodward hailed success of the two city stations. Picture: John Devlin
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Strong growth in the television advertising market drove turnover and profits at STV last year, allowing the media group to boost its dividend by 300 per cent.

Glasgow-based STV, which has a “family” of broadcasting and digital outlets, said its new local stations in Edinburgh and Glasgow are now reaching roughly 300,000 and 600,000 viewers respectively. Their combined audience share represents about one-third of their total potential reach, which chief executive Rob Woodward hailed as an outstanding achievement for the young stations.

Meanwhile, the core broadcasting market anchored by STV’s channel 3 licence in Scotland put in a robust performance during the year, helped by high-profile events like the World Cup. As a result, television advertising revenues remained at just over one-fifth of group turnover even though digital services continued to grow.

Woodward said: “Clearly large sporting events like the World Cup have a big impact. Less so the referendum, though that did have a reputational enhancement.”

The only division where progress failed to materialise was at STV Productions, which makes in-house programmes as well as shows for other broadcasters such as BBC and ITV.

The 164 hours produced fell short of target and margins came up shy at 3 per cent against the goal of 5 per cent. As a result, revenues remained stuck at £13.3 million, broadly flat year-on-year.

Woodward highlighted the number of returnable series commissioned during the year, including Catchphrase for ITV, The Link and Antiques Road Trip for BBC One, Celebrity Antiques Road Trip for BBC Two and The Lie for TV3 in Ireland. STV has also appointed a new head of drama, former BBC drama producer Sarah Brown.

“We expect that will have an impact as we go through 2015,” Woodward said.

As a group, revenues for the year were 7 per cent higher at £120.4m. Pre-tax profit jumped by 14 per cent to £17.3m, in line with the figure expected by analysts at Numis, which has a “buy” rating on the broadcaster’s shares. The board has proposed a final dividend of 6p per share for a total pay-out of 8p, a 300 per cent increase on 2013. Subject to reaching its financial targets, STV is aiming for a total dividend payment of 10p per share in 2015.

Woodward said: “The dividend is a good barometer of how the board views the future of the company.”

Digital revenues grew by 23 per cent to £5.3m, with digital outlets feeding off of the broadcasting product. Three-quarters of STV consumers are now using at least two services per month, while 55 per cent are using at least three services.

The company noted that the launch of its City TV services had created a corresponding increase in browser traffic to its City Apps for Edinburgh and Glasgow. STV Glasgow launched in June to coincide with the Commonwealth Games, while Edinburgh began broadcasting on schedule last month.

Woodward said STV is looking to tweak these services, with a number of changes planned from the start of next month. As of 2 March, daily broadcasting will begin at 7 am rather than noon, while the format of the Riverside show in Glasgow and its Fountainbridge counterpart in Edinburgh will be shortened from 90 minutes to one hour.

Plans are also in place to begin broadcasting a weekly phone-in football show featuring pundits Peter Martin and Alan Rough on Saturday afternoons.

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