STV profits hit by restructuring costs but turnover rises

STV has reported a rise in operating profits after a transformational year which saw the broadcaster take an £11.1 million hit from axing one of its channels.

STV Production's Scottish drama The Victim, starring Kelly Macdonald, is soon to air on BBC1. Picture: Contributed

The Glasgow-based broadcaster reported a 6 per cent hike in operating profits to £20.1m, while total revenue increased 8 per cent to £125.9m.

However, bottom-line pre-tax profits plunged 86 per cent to £1.9m in 2018 on the back of £11.1m in exceptional items, including £2.3m in redundancy costs and a £4.6m writedown of stock related to the closure of STV2.

Chief executive Simon Pitts told The Scotsman: “We’re making excellent progress in delivering our strategic plan and building solid foundations for future growth.

“Of the 500 or so channels you can watch in the UK, STV was the fastest growing and on the back of that the key financial metrics are all up.”

The broadcaster claimed its strongest share of on-screen viewing since 2009, up 13 per cent year-on-year.

Advertising sales rose 4 per cent across national, regional and digital sectors, while revenue at the group’s production arm soared 60 per cent, reflecting an increase in high value commissions.

STV Productions is a key focus, said Pitts, with the division already securing half of last year’s revenues within the first two months of 2019.

He also predicted strong growth for digital offering STV Player, highlighting “valuable, long-term partnerships” with Virgin Media and Sky, along with exclusive rights to this year’s Rugby World Cup.

Pitts, who spent 17 years working at ITV, also said that he would be “happy to talk and potentially collaborate” with ITV and the BBC for the BritBox initiative, a proposed joint streaming service to rival the likes of Netflix.

He said: “This new service will focus on archive programming in particular, as I understand it, so it won’t compete with services like ours but I can see the logic for it, having different broadcasters all lined up together in one place.”

STV is the only channel three broadcaster not owned by ITV.

Pitts added that the firm was “bucking the trend in advertising”, with Scottish sales growing by almost one quarter year-on-year, on the back of the STV growth fund.

The group also announced a key partnership with talent firm WME Entertainment, which it has appointed as its distribution agent for STV Productions.

It confirmed a final ordinary dividend payment of 14 pence per share and full-year dividend of 20 pence per share, up 18 per cent year-on-year.

John Moore, senior investment manager at Brewin Dolphin Scotland, said: “After a big year of changes, it’s a strong set of figures from STV with year-on-year increases more or less across the board.”