STV revenue rebounds past pre-Covid levels, investment continues

Scottish broadcaster STV Group reported a “strong” first half financial performance on Thursday, with revenue and adjusted operating profit accelerating ahead of pre-Covid levels, as it also announced the acquisition of a share of unscripted production company Hello Mary.

The London-listed firm, which holds the ITV Scotland and Grampian franchises, reported a 35% improvement in revenue for the six months ended 30 June to £60.3m, while EBITDA rocketed 78% to £13.9m.

Its operating profit was 118% higher than the first half of 2020 at £11.4m, while its operating margin was seven percentage points higher at 19%.

Adjusted basic earnings per share were ahead 79% at 19.2p, and statutory basic earnings per share were 269% firmer at 15.4p.

Net debt narrowed by 47% to £17.6m at period end, as the board proposed an interim dividend of 3.7p per share, compared to the 3p distributed at the interim in 2020.

On the operational front, STV said the recovery in advertising continued, with total advertising revenue up 32% in the first half, and expected to be between 25% and 30% higher for the nine months to the end of September.

Record audience growth was maintained on both STV at 5%, and STV Player at 66%, while “good momentum” was described in its studios division, with further new commissions and an eighth creative label added through the Hello Mary acquisition.

The sale of the Scottish Children’s Lottery was completed in the first half, with a long-term advertising contract in place.

“Ahead of expectations, STV has returned to pre-pandemic levels of growth and profitability, thanks to the strength of our programming, the success of our diversification strategy, and the commitment and creativity of our people,” said chief executive officer Simon Pitts.

“Our record viewing performance has continued into 2021, with TV audiences up 5% even on last year's lockdown levels, and online viewing via STV Player up a further 66% thanks to huge audiences for Euro 2020, dramas like the Pembrokeshire Murders, and our increasingly popular Player-exclusive boxsets which now constitute over 40% of our on-demand viewing.

“This has driven a 32% advertising bounceback in the first half which is continuing into the autumn.”

Pitts said STV’s strategy of creating a more diversified business through a focus on digital and production growth was also delivering.

“STV Studios is going from strength to strength, winning 15 programme commissions so far this year, and we're delighted to be filming new, large scale returnable formats in Scotland like drama series Screw for Channel 4, quiz show the Bridge of Lies for BBC1, and the genre-bending Murder Island for Channel 4, as we aim to become the UK's leading nations and regions producer.

“Our high margin digital business continues to accelerate with streams nearly doubling so far this year and much more to look forward to for the remainder of 2021, with a new drama boxset drop on the STV Player every week, together with huge events like I'm a Celebrity and the return of the FA Cup.”

Looking at its new investment, STV said it had taken an initial 25% stake in Hello Mary, “further strengthening its creative pipeline in the unscripted genre.

The company said it had a “strong” track record of success in the genre through STV Studios Entertainment and Primal Media.

“Setting up on your own is hugely exciting and over the last two years Hello Mary has scored a number of commissions across many genres, but we are hugely ambitious in how we want to grow,” said Hello Mary chief executive officer Steve Regan.

“Partnering with David and STV Studios made total sense to help us realise our ambitions in unscripted, and when you call your company Hello Mary, entertainment is always at your core."

David Mortimer, managing director of STV Studios, described Regan as an “absolute force of nature”, and “one of the most talented” unscripted producers working in British television.

“Our creative partnerships each bring something different and special to the mix, and we can't wait to see what's next from this ambitious and entrepreneurial indie.”

At 1013 BST, shares in STV Group were up 1.33% at 342p.