STV looks to digital and production to deliver one third of profits in 2018 as it posts 3% revenue slide
Scottish broadcaster STV has posted a 26% drop in profits and a 3% slide in revenue for the first half of the year, but said it remains on track to deliver on its revenue diversification strategy in 2018 to offset a “challenging” advertising market.
STV has posted a 26% drop in profits and a 3% slide in revenue for the first half of the year
The broadcaster has the benefit of having national (represented out of London) and regional (represented out of Scotland) advertisers. This means losses suffered in the national ad market - where ITV represents the business as a sales house - were partially offset by a “positive” performance in the Scottish ad market, chief executive Rob Woodward said today (31 August).
“If you look in Scotland our performance has been particularly positive, we have shown continued growth in our advertising revenues, sponsorship revenues, and a 14% growth in our digital services revenues,” Woodward told The Drum.
The national ad market was down 10% in the first half of the year, but Woodward predicts this rate to slow to 2 or 3% in September.
STV2, which was launched in April 2017 as a consolidation of the broadcaster’s local stations, saw revenue doubled versus its previous incarnations, with Woodward saying it remains on track to break even through the course of 2018.
He described the STV2 viewing figures as “relatively modest”, with average monthly reach at 900,000 viewers. The channel covers about 85% of Scotland, with Woodward claiming about half of the Scottish population has viewed it so far.
Meanwhile STV Productions’ revenues were down 26% in the first half of the year at £2.6m, but the business blamed this slide on timing of deliveries.
“They are always very second half rated, I don't read too much in that,” Woodward said.
A recent commission from the BBC for a four-part drama series, The Victim, will boost the revenue in the second half the year, with the potential for the commission to be a returnable drama, Woodward said.
“That is an important milestone for us as we get ourselves back into drama production, which is an important stepping stone to take us through to building the business of the scale we have just indicated,” he said.
The production business is therefore on track to represent £20m of turnover by the end of 2018, he claims.
What’s more, the broadcaster is set to reach its revenue diversification target which will see non-broadcast services - its digital and production business - generate 30% of the profitability of the group by the end of 2018. Last year non-broadcast services represented 23% of profits.
Woodward’s confidence in the business is reflected in the £10m return of capital it is delivering to shareholders over the next 18 months, which he said shows the “underlying strength of the business”.
It will be welcome news to Simon Pitts, ITV’s online chief, who takes over from Woodward as chief executive in January.
Speaking on the appointment of Pitts, Woodward commented: “The board has been through a rigorous recruitment process. I know Simon, I am delighted to be handing over the leadership of the business to him. I will let Simon reveal his plans for the business when he takes over.”
“I’ve still got a job to do and it’s a big job, and I will continue to drive the company over the next four months before handing over the leadership of the business,” he added.