Studios, ad market rebound drives first-half growth for STV

STV Group announced a robust set of first-half financial results on Tuesday, with significant growth in both revenue and profit.

The London-listed Scottish broadcaster reported a 20% increase in total revenue to £90.4m, driven by strong performance across its Studios, Digital, and Broadcast divisions.

Adjusted operating profit jumped 33% to £10.6m, highlighting the effectiveness of the group’s growth strategy despite ongoing market challenges.

The Studios division led the growth, with revenue up 38% to £37.5m, supported by a solid forward order book of £101m.

STV said the division benefited from successful investments, including an increased stake in the Glasgow-based unscripted formats creator Hello Halo.

The acquisition of additional stakes in five high-potential creative labels further accelerated the portfolio strategy, while exiting four other stakes.

It said the first half also saw 36 new programme commissions, including major recommissions from Apple TV+, BBC, and ITV1.

Broadcast revenue grew 12%, with adjusted operating profit up 47%, supported by an improved advertising market.

Total advertising revenue increased 13%, reflecting a resurgence in the advertising sector, with the third quarter expected to continue the positive trend.

The company’s coverage of Euro 2024 significantly boosted audience engagement, with STV maintaining its position as the most-watched peak-time TV channel in Scotland.

Its Digital segment also posted a strong performance, with pre-commission sales up 14% and VOD advertising revenue increasing 13%.

The STV Player saw a record first half, driven by Euro 2024, with online streams reaching 73 million.

STV added that the digital platform’s partnership with ITV and new content deals with Disney further strengthened its offering.

Looking ahead, STV remained optimistic about its full-year performance, with expectations of continued revenue growth and strong profitability from its Studios division.

The company said it was on track with its cost savings plan, targeting £1.5m in savings for 2024 and a run rate of £5m annually by 2026.

Its board proposed an interim dividend of 3.9p per share, reflecting confidence in the company’s strategic direction and financial health.

“Over the last six years, STV has been successfully transformed into a digital-first media company with a high-growth streaming service and one of the UK's leading television production groups,” said chief executive officer Simon Pitts.

“This strong progress continues in 2024, with revenue and profit both up materially in the first half, reflecting our audience performance, the improving advertising market, and our creative strength in STV Studios, as we continue the successful execution of our growth plan.

“Our production investment strategy is delivering tangible results, with STV Studios continuing its strong revenue growth in the first half, and we have today announced an exciting new deal to take majority control of profitable unscripted formats creator, Hello Halo.”

Pitts said that with high-value recommissions of series such as Criminal Record for Apple TV+ and The Fortune Hotel for ITV also secured, STV had its strongest-ever future order book in Studios at £101m in programme commissions.

“Our audience position remains unrivalled, with STV again the most-watched peak time TV channel in Scotland, ahead of BBC1, and with nearly double the audience share of Netflix.

“Euro 2024 was a major audience and commercial success, propelling STV Player to its most successful first half-year ever in terms of streams and delivering the most watched TV moment of the year so far, with the Germany vs Scotland opening game peaking at 1.38m viewers in Scotland.

“We are on track to deliver our stretching new growth targets out to 2026, and with a fantastic team in place I'm confident Rufus Radcliffe and the board will take the business to new heights in the years ahead.”

At 0938 BST, shares in STV Group were down 0.01% at 262.96p.

Reporting by Josh White for Sharecast.com.