By Kristy Dorsey
STV chief executive Simon Pitts has said the broadcaster has no plans for redundancies among its 500 staff as it launches a share placing to double its financial headroom while battling the downturn in advertising set off by the coronavirus outbreak.
The Glasgow-based group will issue more than seven million new shares, equal to nearly 18% of its existing share capital, in a move that will raise £16.2 million before expenses. Successful completion of the placing will in turn trigger a £20m increase in STV’s banking facilities to £80m.
Taken together, Mr Pitts said the moves will raise STV’s current financial headroom from £30m to £60m.
READ MORE: STV scraps dividend payment as advertising shrinks
The company has “less than half” of its staff on furlough, with those affected receiving 100% of their salary as STV is paying the 20% of wages not covered by the Government scheme. Since the crisis began, STV has implemented £18m of cost savings through a combination of reduced regional programming budgets, lower capital expenditure, deferred VAT payments and management bonuses, a temporary 25% cut to boardroom salaries and the cancellation of its final dividend for the 2019 financial year.
“The cost savings do not include headcount savings, nor do we have plans for headcount savings,” Mr Pitts said.
The company has seen “exceptionally strong” viewing numbers throughout lockdown, with broadcast up 13% and online viewing up 70% for the year to date. However, total advertising revenue fell by 42% in April and 39% in May.
READ MORE: Scottish TV firm bullish over outlook despite growing virus threat
Mr Pitts said June is expected to show a further modest improvement, giving rise to hope that market conditions are set to gradually improve in the coming months.
Production revenue has been “significantly impacted” by the temporary cessation of filming, but production of some programmes under new safety guidelines is set to resume. For STV, this will include the return of ITV’s Catchphrase to the studio in July, and work on the Antiques Road Trip and Celebrity Antiques Road Trip programmes its makes for the BBC.
READ MORE: STV boss defers bonus amid Covid crisis
Following the decision in March to scrap payment of its 14.7p final dividend for 2019, STV has further decided that future dividends will be temporarily replaced by the issue of “bonus” shares. For the 2020 interim dividend, this will not exceed 783,800 new ordinary shares.
“The firm intention is to restore cash dividends as soon as conditions allow,” Mr Pitts said.
The £16.2m placing is conditional on shareholder approval at a general meeting set to be held on July 6. Board directors are taking part in the placing to an aggregate value of approximately £125,000.
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