Glasgow-based media firm STV Group plc said its total revenue rose 21% to £75.3 million in the six months to June 30 “driven by organic growth in Studios and Digital, more than offsetting expected linear advertising revenue declines.”
STV reported studios revenue of £27.2 million, up 294% “due to increased drama deliveries, with division profitable (£0.1m; 2022 loss of £1.0m) and strong H2 profitability coming through with expected seasonal second half weighting.”
STV said: “Regional advertising revenue down 14% to £7.3m (excluding Scottish Government spend, regional down only 2%) …
“Digital revenue +9% to £10.1m (VOD revenue +14%), with adjusted operating profit up 26% to £5.0m …
“Group adjusted operating profit £8.0m, -33% on 2022, reflecting expected impact of declines in higher margin linear advertising revenue and inflationary cost pressure …
“Exceptional costs of £2.8m incurred in the period relating to the new agreement with ITV for digital content and national VOD sales representation (2022: nil) …
“Net debt of £16.3m, up only £1.2m since December 2022 despite reduced profits, with working capital outflow of 2022 partially unwinding in the period; significant facility and covenant headroom maintained …”
STV is proposing an interim dividend of 3.9p per share, in line with H1 2022.
STV Group CEO Simon Pitts said: “STV’s diversification continues to accelerate, with strong growth in Studios and Digital revenues in the first half more than offsetting the expected weakness in the UK linear advertising market, and delivering total revenue growth of over 20%.
“Studios revenues almost quadrupled and VOD revenues on the STV Player grew by 14% as we continue to execute our strategic plan and reduce our reliance on traditional broadcasting. We now expect over 60% of our total 2023 earnings to come from these new growth areas, well ahead of our 50% diversification target.
“Our audience position remains unrivalled, with STV again Scotland’s most popular peaktime TV channel, stretching its lead over BBC1. We delivered the largest commercial audience on 180 of the 181 days of the first half of the year, with the England vs Scotland Calcutta Cup match our biggest audience of the year so far.
“Our streaming service STV Player continues to grow strongly and profitably with online consumption and streams both up by 25% and digital profit up by 26%, as our new long-term content and advertising partnership with ITV bears fruit.
“The transformative acquisition of Greenbird Media represents a major step towards our goal of STV Studios becoming the UK’s #1 nations and regions production company and adds significant scale and creative firepower to the group, illustrated by the recently announced major reality format The Fortune Hotel which will debut on ITV in 2024, produced by Tuesday’s Child.
“Our overall financial performance in H1 was impacted by a challenging advertising market and cost inflation, as expected, although looking forward we see a more encouraging outlook.
“Q3 total advertising is expected to be up 3-5% driven by the Women’s Football World Cup and the Men’s Rugby World Cup which starts next week, exclusively on STV. Our business is well positioned to benefit when the advertising market improves and we also see strong profit growth coming through in STV Studios in the second half of 2023.”