Growth across all divisions
STV grows audience share after hit on STV2 closure
STV2 was closed after poor figures
STV took a £4.6 million hit following its failed STV2 channel, part of £7.8m in exceptional costs which saw pre-tax profits fall to £1.9m from £13.9m a year earlier.
The two largest items were a writedown to the value of STV Productions’ stock following the closure of STV2 last June and the impact of pension payments (£1.6m).
STV has enjoyed its strongest share of viewing since 2009, up 13% year on year, with STV four times bigger than Channel 4 and five times Channel 5.
It also achieved the highest growth in share of any of the UK’s 500+ channels, with viewing volume up 8% and all age groups watching more STV in 2018, including 16-34s.
The data emerged in annual figures showing total revenue up 8% with growth across broadcast, digital and productions. Total advertising also rose, by 4% and operating profit pre-exceptionals is up 6%. Shares were up 1.8% in early trade.
There was no mention in the statement about ITV’s joint venture with the BBC to form Britbox to compete with Netflix.
STV News at Six is the most watched news programme in Scotland, with online streams on STV Player up 24%, and live simulcast viewing up 81%.
· Total advertising revenue up 4% across national, regional and digital
· Broadcast revenue up 3%, including regional advertising up 24%
· Digital revenue up 17%, including VOD revenue up 39%, with digital operating margin increasing to 49%
· STV Productions revenue up 60% reflecting increased high value commissions
· Overall, non-broadcast profit up 30%, with one quarter of earnings now derived from non-linear spot advertising
· Increased returns to shareholders with final ordinary dividend of 14 pence per share confirmed and full year dividend payment of 20 pence per share, up 18% year on year
Simon Pitts, chief executive, said: “The results announced today show encouraging underlying growth across all of our key business areas in 2018. Total advertising revenue is up 4% on the back of STV’s strongest viewing performance in a decade. All age groups watched more STV in 2018, including the younger 16-34 audience, and online viewing via STV Player also gave us a significant boost fuelled by the football World Cup, the soaps, big entertainment shows like I’m a Celebrity and drama boxsets.
“2018 was a year of significant change and progress at STV with a new team and organisation now fully in place and excellent early progress made with the implementation of our strategic growth plan.
“We have signed valuable, long-term partnerships with Virgin Media and Sky, improved the user experience and content of the STV Player, and now launched a new subscription service, STV Player+, to enter the fast-growing pay TV market for the first time.
“In programming, we are producing popular, peak-time series for the UK’s biggest broadcasters, have invested in our news operation and agreed new talent partnerships to strengthen our creative pipeline. Our exciting new Scottish drama series, The Victim, will hit screens shortly on BBC1.
“In advertising, our STV Growth Fund has got off to the best possible start with over 100 Scottish businesses already signed up, driving a 24% increase in regional ad revenues, and I’m delighted to be announcing a doubling of the fund to £10m of airtime.
“2019 has also started well, with strong digital and regional growth off-setting the more cautious national advertising market.”
Margaret Ford, chairman, said: “In a year of significant change for STV, the Board is delighted with the delivery of a strong set of financial results and the extent of the progress that has been made in implementing the new strategic growth plan.
“We continue to increase returns to shareholders and are confident that the growth opportunities identified will be progressed in 2019 and beyond.”
John Moore, Senior Investment Manager at Brewin Dolphin Scotland, said: “After a big year of changes, it’s a strong set of figures from STV with year-on-year increases more or less across the board.
“The business continues to build upon and diversify its offering, with a focus on its digital and production divisions – that latter delivered a 60% increase in revenues on the back of high-value commissions.
“As the announcement of the Britbox initiative between ITV and the BBC and the launch of the new BBC Scotland channel demonstrates, the media sector is evolving at a rapid pace which could make for an interesting 12 months ahead for STV and its peers.”