Record ad haul to boost STV’s firepower for deals

A bumper advertising performance in recent months is set to bolster broadcaster STV’s firepower for further investments.

Strong demand for free-to-air programmes such as STV Scotland Tonight, presented by John Mackay and Rona Dougall, will see the broadcaster deliver record figures. Picture: Graeme Hunter Pictures
Strong demand for free-to-air programmes such as STV Scotland Tonight, presented by John Mackay and Rona Dougall, will see the broadcaster deliver record figures. Picture: Graeme Hunter Pictures

The Glasgow-based group is expected to unveil record revenue across both advertising and production when it unveils full-year results on Wednesday.

Expectations will have been further strengthened by last week’s better-than-expected figures from ITV which showed advertising recovered to its highest ever level in 2021 amid booming demand for free-to-air television services.

Analyst Roddy Davidson at house broker Shore upped his financial forecasts on STV in the wake of a trading update in December in which it flagged a particularly strong final quarter of 2021.

He said the update was a “reminder of the very encouraging momentum that has been building across all areas of STV’s operations for some time”.

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Davidson expects continued growth in revenues to contribute to a strengthening balance sheet with £7.8 million of net cash by the end of 2023 which he said provides “firepower for content production acquisitions and investments”. In September STV Studios announced the acquisition of a 25 per cent stake in Brighton-based production company Hello Mary.

In its latest update STV said total advertising revenue for the full year had increased by between 22 and 24 per cent on 2020. The fourth quarter performance was stronger than expected, despite tough comparators, the firm added.

It expects regional advertising to finish the year strongly, up around 20 per cent for 2021, despite only dropping 5 per cent during 2020 when the pandemic was at its height, and 15 per cent ahead of 2019.

The group also announced that its STV Growth Fund will be increased from £20m to £30m in 2022. Since launch in 2018, the fund has allocated £15.7m across more than 700 deals with Scottish small and medium-sized enterprises (SMEs), attracting in excess of 300 new advertisers to television. Previous guidance that the group’s studios business is on track for its best ever financial performance in 2021, with full-year revenue of £20-25m, was reaffirmed.

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At the time chief executive Simon Pitts said: “The speed and scale of the advertising recovery in 2021 has far exceeded our expectations and underlines the enduring power and relevance of high quality video advertising.

“2021 will deliver STV's highest ever advertising revenues, with brands choosing broadcast and video on demand advertising to boost their post- Covid recovery due to its unrivalled levels of trust, brand safety and value.”

Last month, STV announced that seven international drama titles will be added to its streaming service after a new deal between the Scottish broadcaster and Sony Pictures.

The group’s first content deal of 2022 will see the addition of the critically-acclaimed thriller The Commons, starring Joanne Froggatt, who has featured in Downton Abbey.

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The eight-part series is set in Australia in the near future as the devastating impact of climate change is taking hold. It follows a neuropsychologist who is desperate to become a mother at a time when bringing a child into the world is far more complicated than it used to be.

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