STV boss leaving for new role as group reports rise in turnover but drop in profit for 2023 as it accelerates strategy - analyst reaction

CEO deems 2023 “another year of strong strategic progress”.

STV Group has announced that its chief executive Simon Pitts – one of the most high-profile names in Scottish business – is stepping down to take up another role as it unveiled its results for 2023, including a rise in turnover but drop in profit as it accelerated its move to generate most of its earnings from revenue streams beyond traditional broadcasting.

The London-listed media company headquartered at Pacific Quay in Glasgow said Pitts will be leaving during the next year to take up an undisclosed appointment beginning in the first quarter of 2025, and the process to appoint his successor is under way. STV chairman Paul Reynolds praised the outgoing CEO as an “an outstanding leader of STV over the past six years”, while Pitts himself said: “With STV's latest diversification targets fully achieved, now is the right time to plan a smooth and orderly succession. Our leadership team is very strong, our strategy is clear and it's delivering.”

Roddy Davidson of house broker Shore Capital said: “Simon Pitts deserves enormous credit for leading the transformation of STV, so news of his planned departure is likely to disappoint investors. However, an important part of this process has been strengthening an already highly experienced management team and robust corporate infrastructure – creating a strong platform for his successor.”

STV chairman Paul Reynolds says Simon Pitts (pictured) 'has been an outstanding leader of STV over the past six years'. Picture: contributed.

STV (which recently took majority ownership of drama producer Two Cities Television) also said its 2023 revenue was up by 22 per cent to £168.4 million, with total advertising revenue down by 12 per cent to £97.3m, “impacted by linear advertising revenue and cost inflation and related to broader UK macro uncertainty, as expected”. However its STV Studios arm – which makes shows such as Screw for Channel 4 – saw revenue jump by 182 per cent to £66.8m, while its adjusted operating profit was up 280 per cent to £5.2m, with the performance attributed to organic growth and the positive impact of its £24m acquisition of unscripted TV production network Greenbird Media.

STV also said it ended the year with 75 per cent of its profit coming from outside traditional broadcasting, “well ahead” of its 50 per cent target. Total profit was down by about 70 per cent to £5.3m, while dividend per share for the full year was flat at 11.3p.

Pitts said 2023 was “another year of strong strategic progress for STV” as it “exceeded the stretching three-year diversification targets we set ourselves to double the size of our digital business and quadruple our Studios business”. He added: “Our overall financial performance was impacted by weak linear advertising and cost inflation, as expected and related to the challenging UK macro environment, although the start of 2024 has been more encouraging. Q1 total advertising is expected to be up around 5 per cent,” he added.

Analyst Johnathan Barrett of Panmure Gordon said STV’s 2023 results “show just how tough the advertising market was”. He continued: “The [group’s] diversification strategy has clearly helped. Strategic progress in Studios and digital helped offset roughly half of the broadcast profit decline.

Barrett also said Pitts “will ultimately hand the business over to a new CEO and leave the business considerably better positioned and with key experienced management in place to continue the development work”.