Hit series push STV towards dividend-paying list

By PETER RANSCOMBE
Published on 18/02/2013 11:23

STV could return to the dividend-paying list next year despite analysts questioning the benefits of winning licences to run local television stations in Edinburgh and Glasgow.

The Glasgow-based broadcaster shelved plans last spring to resume payouts after consultations with its major shareholders over banking facility “constraints”.

In August, the firm said it would update investors on the dividend situation again at its full-year results, which are due on Wednesday. STV hasn’t returned cash to shareholders since 2006, when it was Scottish Media Group.

But Numis Securities analysts Paul Richards and Gareth Davies said: “We believe one more good year of cash generation will see STV turn the corner in terms of market perception.

“Assuming our 2013 forecasts are met, then this time next year the company could consider a return to the dividend list. On this scenario, we view STV as undervalued.”

Richards and Davies added: “The group has good momentum in its production and digital businesses, though we see limited prospects for the local television services in Glasgow and Edinburgh rec­ently awarded to the group.”

STV’s production unit has notched up a series of contract wins in recent weeks, including a chat show presented by comedienne Jo Brand for UKTV and a celebrity version of Catchphrase for ITV.

Previous hit series have included Celebrity Antiques Road Trip, which featured, among others, Myleene Klass, John Culshaw and Debra Stephenson.