A word in your shell-like...You could tune in to profit on STV
SCOTLAND watches more television than any other part of the UK – an average of close to four hours a day, some 10 per cent more than elsewhere in Britain.
This week, viewing time will probably be even higher and the Scots’ favourite channel is STV, the Scottish equivalent of ITV with local programming and more thrown in. North of the border, STV is more popular at peak times than any other channel, including the BBC. That gives the company an edge with national and local advertisers. They know that, if they want to reach the Scottish public, STV prime time is the best medium at their disposal.
STV Group is a minnow in the media world, valued on the stock market at just over £150million, compared to a £6billion valuation for ITV. But it has a firm strategy for growth and the shares, at £3.80, should respond.
STV is run by Simon Pitts, a broadcast veteran, who spent 17 years at ITV, including a spell on the main board. Based in Glasgow, Pitts has already made several farreaching changes at STV, since he joined in January 2018.
He closed down STV2, which was loss-making, but he has also focused on the main STV channel and set up a Growth Fund to lure in local advertisers. The fund offers Scottish businesses special rates if they advertise on STV, a move that has seen more than 100 companies place ads on TV for the first time, many of whom have since returned with repeat business.
The approach has done wonders for STV’s local advertising revenues, which rose 19 per cent in the first half of this year, even as national advertising income fell.
Pitts has also strengthened management, beefed up programming and invested time and money in fast-growing areas such as online and on-demand TV, as well as the production of popular programmes and series. STV Player, the group’s digital app, was both hard to find and rather uninspiring when Pitts joined the company. Now deals have been struck with Sky and
Virgin, so viewers can easily find the Player when they switch on the TV.
The content is more fun too, with programmes from all over the world as well as Scottish classics such as Taggart and Rebus.
All this effort has paid off – there are now 3.3 million users of the STV Player, digital advertising is increasing at an annual rate of more than 20 per cent and profits are growing fast.
Pitts is also determined to make more programmes, to be aired at home, sold to other channels or a combination of the two. Elizabeth Is Missing, starring Glenda Jackson, was an STV production for the BBC, as was the crime miniseries, The Victim.
Both were critically acclaimed and more such programming is expected, as these productions can bolster profits and raise STV’s profile with other channels.
The market has been tough for mainstream TV companies this year but STV is ahead of the pack.
Revenues for 2019 are expected to be little changed from last year at £126 million but profits should show a near 9 per cent increase to £21 million, with strong growth in sales and profits forecast for 2020.
The group pays a decent dividend too. Brokers have pencilled in 21p for this year, putting the stock on a yield of more than 5 per cent. Further increases are expected next year and the year after.