Slump in advertising outlook leaves STV with little to feel festive about

SCOTTISH broadcaster STV is expected to post full-year profits slightly below previous forecasts after becoming the latest media company to predict a tough advertising market in the run-up to Christmas.

The Glasgow-based group said regional advertising aired solely in Scotland was 18 per cent lower during the three months to 15 November, in line with previous guidance.

However, an anticipated rebound in the fourth quarter is not coming through as strongly as expected, with regional sales now predicted to be 10 per cent lower for the full year.

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Meanwhile, its share of revenues from national advertising campaigns aired across the UK will lag in November and December against tough comparisons from the previous year, when retailers rushed to lure in shoppers before the UK government’s VAT hike.

STV now expects a 2 to 3 per cent decline in national advertising for the full year.

The group, which holds the channel-three licences for two of Scotland’s three television regions, is the latest in a string of media organisations to warn of weaker advertising as retailers prepare for what is expected to be a sluggish festive season.

Earlier this week, ITV predicted its total advertising revenue would be up by about 3 per cent in November, but would then drop by at least 10 per cent in December.

Looking ahead to the new year, STV said the outlook remained cautious. Even so, chief executive Rob Woodward was positive on the company’s progress at an operating level.

“We are broadly on track to deliver our targets and our strategy remains clear going forward, with investment in strategic partnerships helping extend the STV brand in our core Scottish market and beyond,” Woodward said.

“We are committed to delivering public service broadcasting and creative content across all platforms and to delivering shareholder value.”

Since splitting its Central Belt evening news service in May into separate broadcasts dedicated to the east and west coasts, STV has seen its share of the news audience grow by 17 per cent to an average of 453,000 viewers in October.

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The firm’s production arm received a boost this month with the announcement that it will produce the forthcoming four-part Perez Hilton: Superfan series for ITV2. The celebrity blogger will interview singers Katy Perry, Lady GaGa, Enrique Iglesias and Kelly Rowland.

STV said the decline in national and regional ad revenues would be “almost fully offset” by cost savings. The group is engaged in a reorganisation that led to the announcement of about 20 job cuts in October.

Most analysts responded yesterday by trimming their full-year forecasts on STV, with Peel Hunt’s Patrick Yau predicting a pre-tax profit of £14 million, down from £14.7m previously. Analysts at Numis likewise shaved their estimate from £14.5m to £14m.

Shares in STV rose 1.75p to 103.75p yesterday.