Shares plunge in Glasgow-based STV amid profit warning

The Herald Scotland

a day ago

STV said its expectations for the third quarter are 'lower than anticipated due to the recent further deterioration in the advertising market'. Total advertising revenue for quarter three is now expected to be down by around 8% with July down about 20% against tough comparisons with last year when the final games of Euro 2024 took place. August and September are forecast to be 'broadly flat'.
While advertising has come under pressure, productions arm STV Studios saw a 'significant' deterioration in the commissioning market late in the first half and early in the second half of the year. STV said the worsening conditions had 'impacted our unscripted labels with some projects in advanced development not being green-lit and some commissions being delated to 2026'.
Chief executive Rufus Radcliffe 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 H1 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.
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'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."
The update came shortly after Mr Radcliffe, who succeeded Simon Pitts as chief executive in November, set out a refreshed strategy for the group in May, under which it will target an operating profit of between £30 million and £35m by 2030. The strategy includes the launch of a new mainstream music radio station aimed at 35-54 year olds as part of a blueprint driven by 'two engines': a new audience division combining the company's broadcast and digital units, and STV Studios.
As it launched the new strategy in May, STV warned that it expected total advertising revenue to fall by 18% in the second quarter compared with the same period the year before, when it benefited from the men's Euro 2024 international football championships. Total advertising revenue for the second was expected to be down 1% year-on-year.
Further to Monday's update, group revenue at STV is now expected to be in a range from £165 million to £180m at an adjusted operating margin of around 7%, with £10m of the revenue range driven by updated guidance for STV Studios. Incremental cost savings of £750,000 have been identified, bringing the full-year target to £2.5m.
The company said: '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 FY26.'
Shares closed down 24%, or 46p, at 145p.