Shares in STV lift as advertising market rebounds over summer
SHARES in STV surged after the Glasgow-based broadcaster revealed advertising revenues had rebounded in July and August, following a sharp downturn in the immediate aftermath of the coronavirus pandemic taking hold.
STV made a pre-tax loss of £4.9 million in the six months to June 30 amid the disruption caused by the Covid-19 crisis, which sparked a 20 per cent fall in total advertising revenue over the period. Total revenue at the broadcaster tumbled by 19% to £44.7m as national and regional advertising dropped by 23% and 18% respectively.
However, chief executive Simon Pitts declared all parts of the advertising market – national, regional and digital – had “improved materially” as summer progressed and lockdown conditions began to ease. Shares rose nearly 9% in early trading before paring back, closing up 4.25% or 9p at 221p.
Scottish advertising was back in growth in July and August, and overall advertising returned to positive territory in August. With digital revenues rising 5% in the first half, amid huge growth in online viewing and video on demand streaming via the STV Player, and growing again in August, Mr Pitts asserted that the “outlook is much more positive as we go in the autumn.”
He said: “The signs are encouraging, and we have seen, as lockdown has eased, increased business in retail, in travel, in tourism, particularly for staycations. We have also seen increases in household equipment, professional services, home delivery, health care and even car manufacturers and dealerships
have started to return strongly.”
Mr Pitts said there are clear signs that consumers are keen to support local businesses more during the pandemic. The company reported that it had doubled its investment in the STV Growth Fund, set up to drive television advertising by local companies, to £20m. This has allowed it to bring 55 new advertisers to the channel between April and September.
Mr Pitts said: “I think there is a real desire to support local high street businesses, and I hope we see that continuing in the coming
months, because they are the lifeblood of our local economy.”
STV, which revealed yesterday that chairwoman Baroness Margaret Ford will not be seeking re-election at its next annual meeting in 2021, declared an interim dividend of 3p per share. It will be “satisfied by way of a bonus issue of new ordinary shares.”
The company had scrapped plans to pay a final dividend for 2019 under an £18m cost-saving plan to conserve cash amid the pandemic, which also saw it reduce regional programming budgets,
lower capital expenditure, defer valued-added tax payments, cut management bonuses and temporarily slash boardroom salaries by 25%. It shored up its cash position by raising £15.5m through a share placing, while it extended its bank facilities to £80m from £60m.
STV has utilised the furlough scheme for less than half of its 500 workforce, and has gradually been bringing employees back as conditions have improved in recent weeks. As of this month, it has “called time” on its use of the scheme. The firm has no plans to make any redundancies.
Mr Pitts said: “We are fully aware the virus is not behind us, but we are in a much better place than we feared we might be when the pandemic took hold in April and May. We need all our people firing on all cylinders for what is going to be a very important autumn season for us.”
Although a pause in filming was cited as revenue at its productions arm fell by 17% in the first half, STV hailed the progress of the division. The recently-rebranded as STV Studios secured seven new commissions and four recommissions. It is now producing shows for nine networks, and yesterday revealed it had added a new label to its portfolio. Barefaced TV, founded by Rosie Bray and Lucy Golding in 2017, specialises in factual entertainment for a young adult demographic, with past commissions including Snog Marry Avoid for BBC3 and Naked Beach for Channel 4.
STV Studios, which enjoyed BAFTA success with the drama Elizabeth Is Missing starring Glenda Jackson in July, was recently commissioned by Channel 4 to produce six episodes of a new prison drama, Screw.
Mr Pitts said the division has secured £15m to £20m of commissions for next year, adding: “We are really starting to see the benefit of the creative overhaul that took place last year.”
STV has started the search for a successor for Baroness Ford, who will have served in the role for eight years when she steps down. Mr Pitts described Baroness Ford as a “brilliant chair and will be sorely missed”. He added: “Crucially, our business is in a very good place, despite all the Covid disruption”.