STV profit hike marred by fears over legal dispute

Published on Wednesday 23 February 2011 21:53

STV has withheld its dividend over the uncertainty surrounding a legal dispute with ITV that could cost it more than £21 million if it loses the case.

The long-running battle over its controversial decision to opt out of network programmes overshadowed yesterday's announcement of a sharp increase in profits and revenue.

Pre-tax profits before exceptionals rose 127 per cent to 12.5m on a 16 per cent rise in group revenues after seeing a return of advertising and a number of successful commissions.

Shares surged 17.2 per cent to close at 140p despite another delay to the dividend which the company has not paid since 2007.

The litigation hangs over the broadcaster which has already paid more than 3m to fight ITV claims lodged two years ago that it owes the English group for choosing not to screen some networked programmes.

STV launched a counterclaim over advertising sales and a second claim in relation to new media rights. The first hearing is scheduled for May.

Rob Woodward, chief executive, said: "Shareholders would certainly want confirmation of our dividend policy but given the uncertainty of the litigation there is no expectation of reinstating the dividend."

He declined to say that the results vindicated the board's decision to opt out of programmes such as Downton Abbey which was a hit south of the Border, but he said STV's performance during peak times generated slightly higher audiences than ITV overall.

"Our strongest performing month was October which was when ITV1 was showing Downton Abbey," he said.

The firm was continuing "to deliver against our targets" and was growing across the business. "You have to look at what we set out to do, which is to put content back at the heart of the business," Woodward added.

Revenues in broadcasting rose 16 per cent to 90.3m; in content by 21 per cent to 9.8m and in digital by 50 per cent to 4.2m. The company has met or exceeded eight out of 11 of its key performance targets while four were ahead of 2012 targets.