STV posts £18.2m operating profit as pandemic hits revenues

STV Group plc has reported a full-year operating profit of £18.2m as it posted a better than expected 2020 performance during the coronavirus pandemic.

The company announced on Tuesday that profits were down 19% year-on-year, well ahead of initial expectations due to a strong second-half performance.

Revenues fell 14% to £107.1m. Total advertising revenue was down 10%, with STV-controlled regional advertising down 5%.

However, digital revenues increased by 5%, with video-on-demand revenues from the STV Player up 12%.

STV also announced on Tuesday it will repay the furlough grant of £1.6m it received from the UK Government, reflecting the company’s improving financial performance.

Furthermore, the company said it plans to invest £30m in its businesses over the next three years, with a particular emphasis on growing its digital and studios businesses.

STV chief executive officer Simon Pitts said: “STV is coming through the pandemic with confidence. With profit and net debt materially better than expectations, the 2020 financial results we are confirming today are testament to the strength of our business and the commitment and creativity of our people in what has been an extraordinary 12 months.

“We took proactive steps to conserve cash and raise capital from shareholders and, combined with better than expected trading, we now have a significantly strengthened balance sheet as we look to invest £30m in the next phase of our strategic growth, targeting at least 50% of our operating profit from outside traditional broadcasting by 2023.

“With an improved financial position and good growth prospects, the Board has also recommended a return to cash dividend payments and a final dividend of 6p per share, giving a full-year dividend of 9p per share for 2020.”

Other key announcements include:

Agreement in principle to sell the non-core lottery management company, subject to Gambling Commission approval.
Achieved 2020 diversification target of one third of operating profit from new revenue streams
Refreshed three-year strategic plan focuses on accelerating STV’s diversification, targeting at least 50% operating profit from outside traditional broadcasting by the end of 2023
Studios maintaining positive momentum, with record 19 new commissions in 2020
Record audience growth maintained into 2021 on both STV (+14%) and STV Player (+83%)
Digital business continues to accelerate, with online viewing up 68% and VOD advertising up 12% in 2020, and new content deals with Sony and eOne announced

Pitts added: “We have made another strong start to the year on screen and online, with TV viewing up a further 14% and STV Player up 83%.

“Advertising trends are also improving materially, with April forecast to be up 60-75% and Jan-April +7-9% as lockdown hopefully begins to ease.

“Our positive momentum in 4Studios continues, with recent ground-breaking commission Murder Island for Channel 4, and filming about to start on our new drama series, Screw, also for C4.

“There is also much to look forward to on STV with more new drama than ever in 2021, as well as the exciting prospect of the delayed Euro 2020 football championships involving both England and Scotland.

“While there is inevitably still uncertainty around the pandemic, we are positive about the future outlook.”