SHARES in STV were down more than 2.5% in early trading this morning after the broadcaster signalled a gloomy near-term outlook for the advertising market.
The Glasgow-based company reported that total advertising revenue had fallen by 2% to £110 million for the year to December 31 amid the “uncertain economic climate” and had subsequently fallen by 15% in the first quarter of 2023.
Scottish advertising is expected to be down 20-25% in the first quarter, or flat to slightly up when Scottish Government spend is excluded, while total advertising revenue is forecast to be down 10-15% in April, STV said.
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The broadcaster reported that adjusted operating profits were up 2% at £25.8m in 2022. But total group revenue dropped by 5% to £137.8m compared with 2021, with the decline attributed to the decrease in total advertising revenue and the timing of production deliveries.
However, STV underlined the prospects for productions business, STV Studios, which has won 30 new commissions and 11 returning series. And it declared 2023 was shaping up to be a “breakthrough year” for the Studios division, with £50m of commissions already secured for delivery. Those include three major new returnable drama series currently in production for Apple, BBC and Channel 4.
STV also highlighted the continuing expansion of its digital offer. Registered users of the STV Player increased by 17% in 2022 to 4.9 million, with that number growing to more than five million in the first quarter of this year.
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STV chief executive Simon Pitts told The Herald this morning: “Of course, we are very mindful of the ongoing economic uncertainty. We are not immune from it going into 2023. You see that our total advertising revenues were down last year, but only by 2% [to] our second-highest ever, in fact, and they were still comfortably ahead of the pre-Covid year of 2019.
“Q1 2023 advertising is down, but even there we are seeing some encouraging signs, with Scottish SME advertising slightly up in the first quarter, digital advertising strongly up [and] around 20% ahead, and of course we have been here many times before.
"We have seen the advertising market bouncing back quickly from any economic shocks because TV advertising in our view remains the most effective way of building a brand.”
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