STV back in the black as production surge offsets advert slide
HIGHER revenues from production and digital operations allowed Scottish broadcaster STV to overcome a tough television advertising market and return to profit after a costly legal dispute that plunged it into the red last year.
The Glasgow-based group said its production business was on course to deliver £12 million of revenues and 140 hours of programming this year, with three-quarters of this content to be delivered in the second half.
It includes a newly-announced commission for a celebrity chef cookery series for BBC Two, and the co-production of two-part drama The Poison Tree for ITV.
Non-broadcast is now generating 11 per cent of earnings, putting STV on target to meet its goal of earning one-third of its profits from online activities and television production by 2015.
However, broadcasting revenues have been less steady as spending on television adverts continues to suffer amid the wider economic downturn.
STV’s national airtime revenues are expected to be in line with those of the ITV network for the year as a whole following a decline of 1 per cent in July and 6 per cent in August. STV said sales of regional airtime would likely be down by 12 per cent in the third quarter. Including exceptional costs of £4.9m linked to the settlement of STV’s legal dispute with network partner ITV, first-half profits were £2.1m. That compares to a loss of £6.5m when the Scottish firm booked £13m of costs from concluding the dispute in an out-of-court deal last year.
The resolution of that case has led to a new affiliate agreement in which STV pays a flat fee for access to network programming, allowing it to drop network shows in favour of Scottish programmes.
STV chief executive Rob Woodward said that deal became operational last month after receiving final approval from Ofcom.
“The key for us is that it provides security and sustainability going forward,” he said. On an underlying basis profits were up 8 per cent at £7m.
The company is increasingly combining its digital offering with traditional broadcasting to boost advertising sales. Virtual ad placements using technology from MirriAd – in which STV has a 6 per cent stake – raised revenues from the recent Brave film campaign by more than 10 per cent.
STV – which is bidding for new local TV licences in Edinburgh ad Glasgow – said it is looking at resuming dividend payments and will update investors on this in February.
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