STV Group to slash costs after profit warning: shares fall by a fifth
“The deteriorating macroeconomic backdrop continues to lower business confidence impacting both markets in which we operate” – Rufus Radcliffe, CEO
STV Group is taking the axe to £2.5 million of costs this year, raising the spectre of possible job cuts, after a deterioration in the commissioning and advertising markets in recent months.
The Glasgow-based broadcaster, which holds the Scottish Television and Grampian Television licences, warned investors that its full-year revenue and adjusted operating profit are now expected to be “materially below consensus”. Shares tumbled by more than a fifth in early Monday trading.
In a trading update ahead of September’s results, the group said incremental cost savings of £750,000 have been identified bringing its 2025 target to £2.5m, compared with the £1.7m or so previously outlined.
“We continue to assess the cost base in its entirety and expect to provide an update on further initiatives at our interim results, with further cost savings expected to be realised in 2026,” it added.
At the firm’s flagship studios business there has been a “significant commissioning market deterioration” in recent months as the UK macroeconomic backdrop has worsened, STV warned. This has impacted its unscripted labels with some projects in advanced development not being green-lit and some commissions being delayed to next year.
While STV Studios is developing an international business, most customers remain UK-based, the group noted, meaning the division has been “disproportionately impacted” by the recent slowdown in the domestic market. The forward order book is now £54m, compared to £66m at the end of April.
Rufus Radcliffe, chief executive of STV Group, said: “The deteriorating macroeconomic backdrop continues to lower business confidence impacting both markets in which we operate.
"We’re making good progress in combining and streamlining our broadcast and digital businesses into a new audience division, and launch plans for the creation of our radio station are going well, with key appointments made and infrastructure plans forging ahead.
“STV Studios delivery schedule for the remainder of 2025 has been impacted by the UK commissioning market, which has further weakened at the end of [the first half] and into the second half of the year. However, in addition to winning new and repeat business in H1, we have completed production on key titles with international appeal, including high-end drama Amadeus for Sky and a third series of Blue Lights for BBC One, with the second series of The Fortune Hotel airing on ITV and STV this summer - and our development pipeline is strong.”
He added: “We are proactively responding to market conditions through a combination of investing in targeted future growth initiatives aligned with our long-term strategy and identifying efficiency and cost saving opportunities across the business.
“There continues to be strong long-term growth potential within our business despite the short-term challenges, and we remain laser focused on delivering on the strategic plan we outlined earlier this year.”
Analysts at Panmure Liberum noted: “The company has offset some pressure with immediate cost reductions and will guide on more in September.
“Looking further out we would expect to see the commissioning market pick up again and the successful studios business to gain the benefit as well as the expanded World Cup to provide a lift to advertising in 2026. The shares are likely to feel immediate significant pressure,” they added.
In its update, STV said group revenue for the full year is expected to be in a range from £165m to £180m at an adjusted operating margin of about 7 per cent, with £10m of the revenue range driven by updated studios guidance.
At the time of March’s full-year results, the group said its 2024 performance demonstrated the “benefits of diversification against a challenging market backdrop”. At the top line, revenues grew by 12 per cent, year on year, to £188m, driven by acquisition-related growth in the STV Studios business - responsible for the likes of Amadeus (Sky) and Blue Lights (BBC) - as well as Euros-related advertising during the year.
The studios division racked up revenue growth of 26 per cent, to £84.1m, while adjusted operating profit rose 18 per cent to £6.1m. Digital sales - before commission - were up 8 per cent to £21.8m, while total advertising revenue was up 5 per cent before commission.
It meant that group adjusted operating profit nudged up 3 per cent to £20.6m, with statutory operating profit more than doubling to £13.2m. A group adjusted operating margin of 11 per cent was slightly down on 2023, which had been expected, while the board proposed a final dividend of 7.4p, making a full-year payout of 11.3p per share, in line with 2023.
Number one
On the audience front, the group said STV and STV Player combined were still the “clear number one” for commercial audiences in Scotland. It highlighted a 19 per cent share of total peak commercial audience in 2024 (versus Netflix at 13 per cent, Sky 10 per cent and Channel 4 to 6 per cent). STV was the most watched commercial channel in Scotland on 363 of the 366 days in the leap year of 2024, bosses noted.
STV aired the best-watched quiz show (The 1% Club), drama (Mr Bates vs The Post Office), and soap opera (Coronation Street) across all channels in Scotland during 2024.
STV has had something of a fractious relationship with ITV in the past. The group, which was once called Scottish Media Group, has never been subsumed into the vast ITV empire, despite previous talk of a potential takeover.
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