STV brushes off Brexit threat with profit surge

Broadcaster STV has posted a 50 per cent surge in profits for the first half of the year and says it has seen no impact on advertising levels in the wake of the vote on Brexit.

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STV chief executive Rob Woodward. Picture: John DevlinSTV chief executive Rob Woodward. Picture: John Devlin
STV chief executive Rob Woodward. Picture: John Devlin

Digital earnings and regional airtime revenues drove a strong set of figures for the Glasgow-based group, which runs the main terrestrial commercial TV station in Scotland along with a number of other media outlets. The group’s video-on-demand service, STV Player, was the star on the digital side while strong regional advertising offset a weaker national market.

Chief executive Rob Woodward said national airtime sales were following the usual pattern of tracking GDP growth, which stalled in the second quarter amid a weak services sector and uncertainty ahead of the EU referendum. But since the vote, no advertisers have changed their bookings and there “is no indication” of that happening in the future.

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“We had no notions that national advertising would track what is happening at regional level,” Woodward added. “The two markets are very different – the Scottish market is quite small, so one or two big advertisers can make a significant impact – but I would say that we have worked very hard on forming partnerships with Scottish advertisers, and that effort has borne fruit during the past year.”

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Regional airtime revenues, which represent about 20 per cent of the total, were up by 24 per cent but dominant national advertising was down by 1 per cent. However, the impact of the latter was mitigated by STV’s commercial arrangement with English counterpart ITV, with the contribution paid by STV varying on ITV’s ability to sell into the national market.

Looking ahead, STV expects national TV airtime to fall by 6 per cent in the third quarter, while regional revenues are projected to rise by 18 per cent.

Digital revenues rose by a quarter to £1.9 million as more people spent more time on STV Player. Woodward said between 1.5 and 2 million people have now downloaded the service, and spend an average of 60 minutes per day on it.

Across the group, revenues for the six months to the end of June were 2.8 per cent higher at £56.2m. Profits were 50 per cent higher at £10.2m, helped by the absence of one-off costs.

Last year STV reported at 19 per cent decline in first half pre-tax profits to £6.8m, which included among other things a £1m provision on the value of its investment in MirriAd. MirriAd, which has developed technology to handle TV product placement, ran into trouble in the first half of 2015 after failing to complete a “strategically important” fundraising round.

Woodward said STV has increased profit targets in its high-margin digital business, but revenue expectations in its production arm have been scaled back to £20m in annual sales by 2018.

Investors are in line for a 33 per cent hike in their interim dividend to 4p a share, to be paid on 7 October. The group is targeting a full-year payout of 12p.