Coronavirus: Glasgow-based STV ditches divi – but audience leaps

Broadcaster STV has scrapped its dividend as part of moves to retain an additional £10 million of cash – while it has seen larger audiences, but a strain on advertising revenue due to Covid-19.

STV's studios at Pacific Quay, Glasgow. Picture: STV/Graeme Hunter.

The Glasgow-based organisation said in a trading update that it has seen further “strong” viewing both on TV and online in the first quarter, including a spike in younger audiences.

For example, in the week ending 22 March, its peaktime audience was up 45 per cent, with 16-34s up by a fifth.

In its preliminary results announcement on 10 March it guided to single-digit revenue growth in regional broadcast advertising for 2020, and this “now looks challenging”. Additionally, its full-year guidance of strong double-digit growth in digital advertising “will likely come under some pressure in the coming weeks”.

It added that “decisive” action has been taken on cost and cash flow as well as dividends to mitigate anticipated advertising decline – “to ensure STV remains financially resilient and can continue to execute its successful growth strategy… as well as new initiatives to support local communities and boost local advertising market”.

The media company last week said it was doubling its investment in the STV Growth Fund to the tune of £10 million and providing support to vulnerable communities as part of steps it is taking in light of coronavirus.

STV said yesterday: “We have implemented contingency plans to ensure that we continue to offer a high-quality schedule of new drama, entertainment and factual programmes over the coming months, and in particular to sustain our public service news output.”

It also said it has good ongoing access to liquidity through its £60m overdraft and revolving credit facility.

Dividend

The board is no longer recommending a final dividend of 14.7p per share for the financial year ended 31 December, and this will no longer be paid, conserving £5.5m.

“We recognise how important the dividend is to our shareholders and the board will revisit the position for future dividends once there is greater clarity on the impact of Covid-19 on the business.”

It said cutting the dividend should help ensure at least an extra £10m of cash (over and above current cash balances) is retained in the business in the short to medium term.

Boss Simon Pitts said: “Over the last two years, STV has demonstrated its resilience and ability to grow the business in the face of challenging market conditions. These are now extraordinary times and our immediate focus must be on protecting our brilliant people and fulfilling our public service role to keep our viewers informed and entertained in the most trying of circumstances.”

Shore Capital analyst Roddy Davidson said: “We continue to rate STV as a well-managed business with an entrepreneurial culture.”