• Pearl & Dean has been consistently in the red since being acquired in 1999, partly due to an 'onerous' contract with Vue Cinemas. Picture: Complimentary
The price compares to the 22.2 million paid when the company, then known as SMG, bought Pearl & Dean in 1999.
Analysts expected the Glasgow-based group to get 15-20m when the subsidiary was put up for sale in 2006.
News of the deal emerged as STV confirmed its business was off to a stronger start this year than in 2009. National television airtime revenues were 17 per cent higher in the first quarter, while the regional airtime market was 4 per cent higher, though this was against last year's industry weakness.
"There is no getting away from it – 2009 was a horrendous year," chief executive Rob Woodward told shareholders at yesterday's annual meeting.
However, Woodward added that the disposal of Pearl & Dean would allow STV to focus wholly upon its strategy of providing unique content across both broadcasting and digital delivery platforms.
Pearl & Dean is the last of STV's "legacy businesses" to be sold. It will be acquired by Image Limited, a business owned by Empire Cinemas' boss Thomas Anderson. Currently the UK's second-largest cinema advertiser, Pearl & Dean sells about one-third of all ad slots shown across Britain.
Despite its market stature, Woodward said Pearl & Dean had been in the red ever since becoming part of STV, with losses last year amounting to 13.3m. Much of this is linked to an onerous long-term contract with Vue Cinemas, which receives guaranteed minimum payments from Pearl & Dean.
Though STV will only receive a token payment for Pearl & Dean, it will recover 9.1m of an inter-company loan that it extended to cover this year's commitment on the Vue contract. Image will repay 2.5m of this once the deal is completed, with further monthly payments to be made through to January 2011. STV will use the funds to pay down debt. Meanwhile, television advertising sales are said to be "in line" with the national market, which is forecast to rise by 21 per cent in April and a further 23 per cent in May. Regional advertising is recovering more slowly, with a forecast rise of 5 per cent in the second quarter.
As a result, Woodward said STV would accelerate its investment in high definition services, with HD scheduled to be available on digital terrestrial and digital cable in time for the 2010 World Cup..
Woodward said STV looked forward to sorting out its acrimonious relationship with ITV under incoming chief executive Adam Crozier, but added that the Scottish company would "continue to fight our corner in the courts" if their differences can't be settled amicably. STV – which holds the ITV licence in Scotland – is pursuing ITV for alleged unpaid advertising revenue, while ITV claims it is owned money for the part-funding of drama programmes that STV decided to pull last year.
STV is also awaiting the outcome of the General Election to see whether a transfer of its news programming to the Scottish News Consortium, including Johnston Press, publisher of The Scotsman, will go ahead. The Labour government heavily backs the new setup, while the Conservatives have indicated they would scrap the plan.