STV Group (LON:STVG) reported first-half results in line with expectations, with stronger advertising revenue and cost savings helping offset a sharp decline in studio activity amid a prolonged slowdown in television commissioning.
The company generated first-half revenue of £66 million, down 27% from the prior year. Total advertising revenue rose 5% to £48 million, aided by demand around the FIFA World Cup, while digital revenue increased 13% to more than £12 million. STV said the digital figure included the first contribution from its recently launched STV Radio service.
Advertising strength offsets studio weakness
STV’s audience division performed strongly during the period, with profitability rising 27% from the prior year. Chief Financial Officer and Chief Operating Officer Lindsay Dixon said high-margin World Cup advertising revenue and savings from the group’s restructuring program supported the improvement.
However, the company said advertising conditions became more difficult after the tournament. Third-quarter total advertising revenue is forecast to decline about 5%, suggesting that the World Cup did not trigger a broader market recovery.
Dixon said regional advertising faced particularly tough underlying conditions, even though the category benefited to a lesser degree from the World Cup. She said the pressure was not due to fewer brands advertising with STV, but rather lower campaign spending as customers responded to wider economic uncertainty.
STV Radio, which launched during the period, reached 139,000 weekly listeners after six months on air and became a top-10 commercial radio station in Scotland, according to the company. Its average weekly listening time was 9.3 hours. STV said radio recorded a first-half loss because it could not appoint national sales representation until its first RAJAR listening figures were released in August.
The company has since appointed Bauer as its national sales agent. It said STV Radio’s initial RAJAR listening figures were ahead of expectations and supported its commercial rollout.
Studios impairment reflects commissioning delays
STV Studios recorded a £3.2 million loss in the first half, in line with guidance issued in June. Revenue declined partly because the prior-year period included significant scripted-program revenue that does not typically recur in consecutive periods.
The company said the U.K. commissioning market remains subdued, with decisions on new and returning programs taking longer and competition increasing for a limited number of available commissioning slots. Those conditions led STV to recognize a £25 million non-cash impairment charge in the first half, including a £17 million goodwill impairment.
Dixon said the impairment reflected a more cautious assessment of current market conditions and the future cash flows expected from the studios business. STV expects Studios to be profitable in the second half, as is typically the case, but now expects the division to break even for the full year.
Looking into 2027, the company said Studios profitability will depend on the timing and outcome of a small number of individually material commissioning decisions.
- STV said “Bridge of Lies” and “Celebrity Catchphrase” were recommissioned.
- “Blue Lights” is set to return for a fourth series on BBC One and BBC iPlayer in the autumn.
- “The Witness,” STV’s first drama for Netflix, was the service’s most-streamed program globally for two weeks in June, according to the company.
- Primal Media secured its first commission for Disney’s Hulu.
STV said it is concentrating its Studios investment on returnable intellectual property, international customers and selected digital-first opportunities. It is also reviewing its portfolio of production labels to better align the business with changes in commissioning, viewing and content monetization.
Cash preservation and audience expansion remain priorities
Total net debt was just under £43 million at the end of June, down from the start of the year and within STV’s £75 million facility limit. Net debt represented leverage of 2.4 times, while interest cover stood at 5.5 times, both with significant covenant headroom, Dixon said.
The company expects year-end net debt to remain in a range of £40 million to £45 million. It also said it has revised its pension contribution schedule after discussions with trustees. Rather than a previously expected £21 million catch-up payment during 2027, STV now expects to pay £8 million in December 2027 and £10 million annually through December 2031.
STV did not propose an interim dividend, citing limited advertising visibility, slow commissioning decisions and its focus on financial flexibility.
In the audience business, STV said it delivered 99% of Scotland’s top 500 commercial audiences in the first half. STV Player recorded its best six-month period, with viewers watching more than 40 million hours of content. Across STV and STV Player, 3 million people in Scotland watched the FIFA World Cup, generating more than 39 million viewing hours.
The company said it is developing additional advertising and audience products, including STV ADapt, an AI-enabled targeted advertising offering planned for a fourth-quarter rollout, and STV Win, a competitions proposition intended to create another revenue stream. It said 66% of brands on its register now use more than one STV platform.
STV said its priorities are to deliver audience-growth initiatives, reshape Studios around areas with the strongest prospects, and protect cash and balance-sheet flexibility while market conditions remain uncertain.
About STV Group (LON:STVG)
STV’s exciting vision is to become Scotland’s leading platform for audiences and advertisers and a global content powerhouse.
On-air, STV reaches more than two in three Scottish adults every month through its TV channel and streaming service, STV Player. It will soon expand its audience even further by launching an audio division and a major new Scotland-focused commercial radio station.
STV Studios is a portfolio of 20+ production labels based across the UK’s nations and regions, creating world-class entertainment for UK and international networks and streamers including Apple TV+ drama Criminal Record, global phenomenon LEGO Masters, antiques favourite, The Travelling Auctioneers for BBC and reality juggernaut The Fortune Hotel for ITV.
