Shares in STV closed up last night after the Glasgow-based broadcaster published an encouraging forecast for first-half advertising revenue and progress on cutting costs.
The company underlined the anticipated boost from the forthcoming Euro 2024 football tournament, which kicks off when Scotland takes on host nation Germany next Friday (June 14), as it signalled its expectation that total advertising revenue will rise by 15-20% in the second quarter. Having increased by 5% in the first quarter, TAR in the first half overall is expected to grow by 10-12%.
The update marked a welcome improvement in fortunes for STV in the advertising market. In March, the company reported a 12% fall in total advertising revenue to £97.3m in 2023, though it did signal at the time that conditions were showing signs of improvement in the current year.
STV, which will have exclusive live coverage of the Germany v Scotland clash in Munich, said the improving conditions are driven by Euro 2024, one of the most widely watched events in the global sporting calendar.
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Each of the company’s advertising segments – national, regional, and digital (pre-sales commission) are all expected to grow in the first half of the year. National advertising is forecast to increase by around 15%, regional advertising by about 2% (with sales from small and medium-sized enterprises up 10%), and video-on-demand advertising on the STV Player expected to grow by around 10%.
The improving trends in the advertising market come as the company’s burgeoning productions arm, which makes shows such as Blue Lights and Antiques Road Trip for the BBC and won its first commission from Netflix in March. STV Studios will produce a three-part drama series called The Witness, based on the 1992 murder of Rachel Nickell on Wimbledon Common for the streaming giant for delivery in 2025. It is also producing drama series Amadeus for Sky, which will be delivered in 2025.
STV said that its Studios business had secured future revenues of £86m at the end of May, with new commissioning wins of around £11m and programme deliveries of about £12m since its previous recorded order book of £87m in March. The company said STV Studios remains on track to reach its target of £140m in 2026.
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Meanwhile, the company said its three-year cost-saving programme was on course to deliver around £1.5m in savings in 2024. Savings are expected to increase to a run rate of £5m per annum by 2026, as previously guided, amid moves to “modernise and simplify the business for a digital-first world”.
Chief executive Simon Pitts, who will leave STV to take over as boss of media and entertainment giant Global early next year, said: "STV continues to make strong strategic progress and remains on track to deliver its ambitious growth plans out to 2026.
“Total advertising revenue grew 5% in Q1, in line with guidance, and there is good advertising momentum in Q2 which we expect to be up 15-20%, driven by Euro 2024.
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“STV Studios continues to perform strongly, securing major new orders from Netflix, Sky and Discovery in the first half despite the challenging commissioning environment, and is on track to hit target revenues of £140m in FY26.
“We have a fantastic programming line-up for the rest of 2024, kicking off next week with live and exclusive coverage of the opening game of Euro 2024 between Germany and Scotland on STV and STV Player."
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The update came after it emerged on Tuesday that the headquarters of STV in Glasgow is one of two buildings in Scotland which have changed hands for a combined £36.6 million.
LondonMetric Property announced that it had sold the broadcaster’s Pacific Quay home and an 85,000 square feet office in Dundee occupied by BT to a single buyer.
STV has a further 17 years to run on its lease for the 60,000 sq ft premises
Shares in STV climbed more than 3% yesterday, closing up 1.77% or 5p at 288p.
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