PROFITS at STV plunged by nearly 90 per cent after redundancy costs hit the bottom line at the broadcaster last year, as its chief executive insisted it can prosper as an independent business.
Glasgow-based STV axed nearly 60 jobs last year following a review carried out by chief executive Simon Pitts, who shut down the firm’s loss-making STV2 channel just over a year after its launch in April 2017.
The restructuring, which affected 34 roles in the news operation and 25 at STV2, contributed to the firm reporting exceptional items totalling £11.1 million, including £2.3m of redundancy costs. The one-off charges dented pre-tax profits, which dropped by 86 per cent to £1.9m.
READ MORE: STV boss: Cuts will not diminish our commitment to Scottish news
However, the broadcaster said its underlying performance had been strong, with profits before exceptionals up 6% to £19m. Total revenue rose by eight per cent to £125.9m following growth in its broadcast, digital and productions divisions. And overall advertising revenue climbed by
4%, as “cautious” behaviour by national advertisers was offset by a more resilient local market. That came amid what Mr Pitts said had been STV’s “strongest viewing performance in a decade”, which helped drive regional advertising up by 24%.
Mr Pitts, who succeeded Rob Woodward in January of last year, noted: “Of the 500 or so TV channels that operate in the UK, STV was the fastest-growing in 2018. We are also bucking the trend in advertising.” Mr Pitts added: “I’m happy to say that 2019 has started very positively too, with viewing up a further nine per cent on what was already a strong year last year, continuing the good growth in regional and digital advertising which helps to offset an understandably, slightly more cautious national market.”
READ MORE: STV investors protest over new pay policy
Reflecting on the redundancies Mr Pitts, who joined the firm after nearly 20 years with ITV, said STV “had to make some tough choices last year, but we made them for the right reasons to invest to grow the business.” He said: “And the restructuring of STV is now complete. The new teams are in place and working well.”
He highlighted growth of seven per cent in the firm’s news audience, and declared its relaunched News at Six was now “Scotland’s most-watched news programme”, following investment of around £2m in training and digital technology.
Asked to comment on the competition posed by the new BBC Scotland channel, in particular its flagship news programme The Nine, Mr Pitts said that “anything that leads to more TV being made in Scotland, and more investment is a good thing for the creative economy.”
READ MORE: Outgoing STV boss: Broadcaster has reconnected with Scotland
He added: “We are already working together on shows for BBC Scotland. We had two new shows commissioned very recently. And these days there is a lot more that unites old rivals like STV and BBC than divides us, and collaboration is important if we are both going to prosper.
“In terms of ratings, we are not worried, especially given our very strong performance last year, and our equally strong start to 2019. It is the other 500 channels in the UK who should be worried about us, rather than the other way round.”
Asked to comment on the recurring speculation suggesting STV is a takeover target, with ITV the most-commonly named suitor, Mr Pitts said: “We have set out a clear and ambitious growth plan, and it shows we can be a successful independent business. These numbers are starting to show that. It involves investing in programming, investing in digital and investing in our people to build an exciting independent future for STV. That is our sole focus.”
STV reiterated that its development of higher margin productions is a key area of focus. Revenue from productions increased by 60% to £16.3m last year, with the division making an operating profit of £100,000 after breaking even last year.
The period saw STV Productions finish work on new courtroom drama The Victim – starring Kelly Macdonald and John Hannah – which is due to air on the BBC in the coming weeks. Mr Pitts said there could be an opportunity to supply archive content to Britbox, the new streaming service launched jointly by the BBC and ITV.
Shares in STV closed up 2p at 359.5p.
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