STV reports advertising rebound and new studios deal but sinks to first-half loss

STV has seen a recovery in advertising revenues and added another producer to its growing studios portfolio after the pandemic dragged the group to a first-half loss.

STV chief executive Simon Pitts said the outlook was much more positive in H2, with advertising trends improving materially in July and August. Picture: Laurence Winram

Releasing results for the six months to the end of June, the Glasgow-based broadcaster said it had seen its highest audience growth ever, up 12 per cent, with all time viewing share of 19.2 per cent. That growth had continued as lockdown measures were relaxed, it added.

While total advertising revenue slumped 20 per cent as the industry was battered by the effects of the coronavirus outbreak, the group pointed to an improving picture. Year-on-year declines of 33 per cent in June and 7 per cent in July were followed by a modest 1 per cent gain last month.

Although revenue at the STV Studios arm, formerly STV Productions, was down 17 per cent, reflecting a pause in filming during the second quarter, the business secured “significant” new commissions, including drama series Screw, commissioned by Channel 4 on the back of Bafta-winning Elizabeth is Missing and The Victim.

The latest results came alongside news of the addition of a new label to the studios portfolio, factual entertainment producer Barefaced TV.

Founded by Rosie Bray and Lucy Golding in 2017, Barefaced was hailed by STV for building a reputation for “original and surprising content”. Its most recent production is Channel 4’s Naked Beach.

STV chief executive Simon Pitts said: “While our advertising and production revenues have been significantly impacted by Covid-19, we have been able to mitigate nearly half of the impact thanks to the proactive steps we have taken and our variable cost model.

“The successful share placing in July has also significantly strengthened the balance sheet and given us the confidence to continue to invest behind our growth strategy.

“The outlook is much more positive in H2, with advertising trends improving materially in July and August, and a strong schedule to look forward to on TV and online including the return of a full complement of weekly soap episodes from later this month, new drama like Des starring David Tennant, and entertainment juggernauts like the rescheduled BGT live finals and I’m a Celebrity.”

He added: “Our new creative partnership with Barefaced TV will target younger-skewing factual entertainment formats and establishes a 7th creative label within the newly rebranded STV Studios, which aims to become the UK’s leading nations and regions producer.”

The group saw last year’s first-half, pre-tax profit of £9.1 million turn into a £4.9m loss.

An interim dividend of 3p per share was declared, down from 6.3p last year, to be satisfied by way of a bonus issue of new ordinary shares.

Roddy Davidson, an analyst at brokerage Shore Capital, noted: “We are pleased to note the positive underlying momentum, robust financial position and optimistic outlook.

“More broadly, we view STV as a well managed and highly entrepreneurial business with strong operational momentum and a clear and consistently executed strategy for accelerating growth in digital and production.”

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