By Scott Wright
SCOTTISH broadcaster STV has reinstated its dividend and pledged to return furlough cash to the UK Government, as chief executive Simon Pitts declared it was “coming out of the pandemic with confidence”.
The Glasgow-based company signalled optimism over the outlook as it reported better-than-expected results for 2020, noting that advertising trends are showing signs of “materially improving”.
It underlined its confidence with a commitment to return a £1.6 million furlough grant to the UK Government, and by reinstating its cash dividend at 6p per share, taking the full-year pay-out to 9p per share. However, Mr Pitts cautioned there was “still uncertainty” in the market. Shares closed up 3.3 per cent, or 11p, at 336p.
Mr Pitts, who joined STV in 2018, told The Herald that repaying the furlough cash was the “right thing to do” and a “signal of confidence that the business is on the right path. It is the same around the dividend.”
Mr Pitts said: “We are now in a better financial position than we thought we might be due to the steps we have taken, therefore we decided to return the funds.
“We acted quickly to conserve cash and costs, to raise new capital [when the pandemic struck]. Of course there is still uncertainty in the wider market, but the ad trends are improving, studios is busier than ever and we are cautiously optimistic.”
STV reported that pre-tax profits tumbled by 65 per cent to £6.7m last year as its earnings felt the impact of the early months of the pandemic. Total advertising revenue finished the year down 10% at £91m, which came after a significant improvement in the second half of the year. Advertising had plunged 20% in the first half as the effects of the pandemic took hold.
STV highlighted that regional advertising had outperformed revenues at national level, dropping by 5% to £14m, and had benefited from increasing investment in the STV Growth Fund.
Mr Pitts said this support had allowed 91 Scottish small and medium-sized enterprises to advertise on television for the first time in 2020, in spite of the pandemic.
“It [the economy] is still opening up,” he said. “The real measure will be when non-essential retail opens up [which] we hope [will be] next month.
“We have already seen home improvement, travel, cleaning companies, finance, legal, some B2B-focused business starting to come back in Scotland, and we are hopeful that the combination of restriction leaving and the incentive we can put out there through the Growth Fund will help drive that growth in the coming weeks and months.”
While the company was taking steps during the year to support its cash position as the coronavirus crisis unfolded, including by scrapping its final dividend for 2019, STV said it had recorded strong audiences and significant growth of its digital streaming service, STV Player.
The company reported a 14% rise in the audience for STV, giving it an “all-time viewing share” of 19.2%, while online viewing increased by 68% in 2020. Digital audiences are up 83% so far this year.
Mr Pitts said the STV Player is now available in 17 million UK households, with new “digital only” content being continually added.
Asked if the streaming business had benefited from the population being in lockdown, he said: “It is a good point. Our audiences have been record-breaking both online and on TV, but what I’d say is that it is not just a lockdown effect. They have remained high across the whole of last year, even in non-lockdown months.”
STV also hailed the progress made by its revitalised productions business, which won 19 new commissions and is now working on shows for 11 different networks. New commissions include the biggest order placed by the BBC for four new series of Antiques Road Trip, and a third series of Inside Central Station for BBC Scotland.
Mr Pitts said STV has now accelerated several of the company’s growth targets, including to quadruple turnover at STV Productions to £40m by 2023. He said the division is reaping the benefits of its new leadership and creative team which has been installed in the last 18 months, with the overhaul including the acquisition of three production companies. Further acquisitions will be considered as the firm looks to build its pipeline of productions.
Mr Pitt said: “It is more complicated making shows in Covid times. We have very strict rules around testing and social distancing, but so far, those protocols have worked really well and crucially safely.
“As a result of the new 19 commissions we won last year we have been able to say this year we have already secured £20m to £25m of new commissioning revenue for 2021 – nearly three times the amount we delivered last year across all seven of our creative labels.”
He added: “When you win a commission, especially a big one, it gives a real boost to the local economy and local talent.
“That is why we are so keen to make progress here, because we need returning series in order to have lots of work for Scottish talent, both on and off screen.”
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