Glasgow-based media firm STV Group plc said on Wednesday it will close its loss-making STV2 channel with the loss of 25 jobs and also cut 34 jobs at its main STV News operation as part of what it called a “strategy for creative and digital growth.”
STV said in a trading update: “Reflecting the challenging economics of local television and anticipated new competition from BBC Scotland, our loss-making STV2 channel will close at the end of June 2018, with content investment shifting to the STV main channel and STV Player.
“This will result in savings of £1m per annum and a headcount reduction of 25 …
“We have launched a comprehensive change programme in news — STV News 2020 — which will bring investment in skills, technology and digital, as well as reinforcing our reputation as the best news service in Scotland, while delivering savings of £1m per year and a headcount reduction of 34.
“We are recruiting a new Head of News to lead this transformation …”
STV added: “We will use these cost savings plus other redirected content spend to allocate £15m for new investments over the next 3 years — the majority of which will be spent on new original content, with a focus on formats and returnable series …
“Our 2018 performance continues to be strong across all areas.
“On screen, STV has had its strongest start to a year since 2009, with peak time viewing share at 21.7% January to April, 0.7 share points (or 3%) ahead of ITV. Online viewing is also up 29%.
“National advertising revenue is expected to be up 2% in H1, regional and digital advertising revenues are expected to be up 20 to 25% over the same period, resulting in total advertising growth of 6% in H1.
“STV Productions has already secured 30% more revenue in 2018 than for the full year 2017.
“We are allocating £15m for investment in new content, creative partnerships and the STV Player over the next 3 years.
“This will be funded entirely by cost savings from news and STV2, as well as redirected C3 programming cost.
“We expect the return on this investment to come from a mix of C3 sponsorship revenue, increased VOD advertising revenue, and higher production and secondary sales revenues …
“We expect to incur reorganisation costs of around £5m, of which £2 to 3m will be cash, covered by funds originally earmarked for the buyback programme.
“We will also be consulting with shareholders on options to improve the effectiveness of the existing capital return.
“As a sign of our confidence in the underlying business, the board is proposing to further accelerate the dividend, increasing the proposed full year dividend in 2018 by a further 2p to 20p, +18% on 2017.”
STV CEO Simon Pitts said: “This is a positive vision for STV that will re-establish the company as a creative force in Scotland and beyond.
“We will invest in creative talent, new original programming and digital to ensure STV becomes Scotland’s home of news and entertainment and delivers long-term value for advertisers, shareholders and viewers alike.”
STV also announced that Alistair Brown, Chief Technology & Platforms Officer, has decided to leave STV at the end of June.
“This decision was taken by Alistair Brown having elected not to put himself forward for a new role of Managing Director of a newly formed digital business,” said STV.