9th November 2023
STV Group plc
· STV operating profit* expected to be c.£20m in 2023, impacted by weak national TV advertising in Q4 and the related effect on the rate of commissioning in Studios
· Group revenue up over 30% for first 9 months, more than offsetting linear advertising decline
· Digital and Studios revenue and operating profit* expected to be materially up on 2022, underlining the continued success of STV's diversification strategy
· Studios operating profit* now expected to be at least £5m
· Regional (Scottish) advertising expected to continue to outperform National
Simon Pitts, STV Chief Executive, said:
"STV continues to make strong strategic progress despite a challenging linear advertising and commissioning market impacted by ongoing economic uncertainty in the UK.
Our diversification strategy delivered total revenue growth of more than 30% for the first 9 months of the year as well as material profit growth in our Digital and Studios businesses.
While the linear advertising picture is weaker than expected in Q4, VOD advertising on STV Player continues to show good growth in 2023 and STV regional advertising is once again outperforming national thanks to the ongoing effectiveness of the STV Growth Fund.
We remain confident in our future growth prospects, with a strong content line-up on STV and STV Player, a compelling pipeline of new programme ideas across the expanded STV Studios, and a clear growth strategy, ensuring that we are well placed for the economic recovery when it comes."
· STV Group plc today announces that it expects operating profit* for the year ended 31 December 2023 to be around £20m due to ongoing weakness in the linear TV advertising and commissioning markets relating to UK macroeconomic uncertainty.
· STV's total advertising revenue (TAR) improved in Q3 and performed in line with guidance at +3%, benefitting from a strong programme line-up including the FIFA Women's World Cup and the Men's Rugby World Cup. As a result, TAR for the 9 months to the end of September improved to -9% from -14% at the half year.
· As expected, year on year advertising performance in Q4 2023 has been impacted by the presence of the FIFA Men's World Cup in Q4 2022. However, the underlying linear advertising market has also been softer than expected due to the ongoing economic uncertainty in the UK. As a result, we expect Q4 TAR to be down around 15% and full year TAR to be down around 10% versus 2022, which was the year of the second highest advertising revenue performance ever for STV.
· Within that, VOD advertising is up 14% for the 9 months to the end of September, with 9 consecutive months of year on year growth, and we expect STV's digital operating profit to be up at least 10% for the full year.
· Regional advertising is down 10% for the 9 months to the end of September, ahead of national linear advertising (-14%), and we expect Regional to continue to outperform National for the full year.
· STV Studios (including Greenbird) has continued its momentum in 2023, producing a record 70 series this year while securing c.50 new commissions and recommissions, despite the global commissioning market also being impacted by the economic slowdown.
· STV Studios revenue will nearly treble this year to £65-70m, comfortably in excess of our £40m target, with operating profit of at least £5m. This is below previous guidance of £70m of revenue and £6-6.5m of operating profit due to commissioning softness in the second half of 2023. Within this Greenbird will contribute £15-20m revenue and c.£3m of profit in the second half, broadly as guided.
· Overall, STV Group revenue for the first 9 months of 2023 was £114m, +32% on the same period in 2022 (+41% including Greenbird), comfortably offsetting the decline in linear advertising revenue.
· The combination of continued strong cash generation across the business and management actions means that year end net debt will be between £30-35m. There continues to be strong focus on cost control across the Group, with cumulative cost savings of c.£3.5m delivered across 2022 and 2023 so far, and the integration of Greenbird Media is on track, with synergies of at least £750k p.a. from 2024 reconfirmed.
The information contained in within this announcement is deemed by the Company to constitute inside information as stipulated under the UK version of the Market Abuse Regulation (EU) No 596/2014 as it forms part of UK law by virtue of the European Union (withdrawal) Act 2018. Upon publication of this announcement, this inside information is now considered to be in the public domain.
STV Group plc:
Kirstin Stevenson, Head of Communications, Tel: 07803 970106
Geoffrey Pelham-Lane, Partner, Tel: 07733 124 226
Ben Woodford, Partner, Tel: 07790 653 341