STV has reported record profits, as its diversification strategy continues to deliver.
The broadcasting group's full-year to 31 December 2022 revealed adjusted operating profit up 2% year-on-year to £25.8m.
However, group revenue was down by 5% to £137.8m, as a result of total advertising revenue falling 2% to £110m, as well as the timing of certain TV production deliveries.
Video on-demand advertising grew by 9%, while regional advertising fell 4%, meaning total advertising revenue was down around 15% in the first quarter.
Scottish advertising expected to be down 20% to 25% in the first quarter, excluding Scottish Government spend.
Digital revenue was up by 7% at £19m, while digital profit rose 9% to £8.5m.
STV Studios' revenue of £23.7m was down 11% on the prior year, due to timing of deliveries, in particular drama programming - although studios adjusted operating profit was up 6% at £1.4m.
Adjusted operating margin of 18.7% - up from 17.5% in 2021 - reflected improved margins in both digital and studios.
Net debt of £15.1m was up significantly on a net cash balance of £300,000 in 2021, driven by short-term working capital needs to support studios growth.
On TV, STV’s peak-time viewing share of 22.5% was the highest since 2009, with the most-watched peaktime channel in Scotland for fourth year in a row.
STV recorded an all-time audience higher than any other commercial channel on 361 days of 2022, with November giving the channel its highest viewing share for 19 years, driven by I’m a Celebrity and the FIFA World Cup finals.
The STV Player saw its registered users rise 17% to 4.9 million, with online viewing up 6% and advertising impressions rising by 27%.
Away from the financial side, STV Studios continues to scale, with 30 new commissions and now 11 returning series, alongside three new returnable drama series currently in production for Apple, BBC and and Channel 4. 2023 already has more than £50m of commissions secured for delivery; more than double 2022.
More than 1,000 advertising deals have been made through the STV Growth Fund since its launch in 2018, allocating just under £20m. In 2022 there were 223 deals, with 70% of last year's growth fund members re-booking from the previous year.
All this means STV is on track to hit or surpass its three-year growth targets to double digital viewing, users and revenue (to £20m), quadruple studios revenue (to £40m) and achieve at least 50% of operating profit from outside traditional broadcasting.
The board has proposed a final dividend of 7.4p per share for 2022, up 1% on 2021, giving a full-year dividend of 11.3p per share, up 3% on 2021.
Chief executive Simon Pitts said: “Our diversification strategy, focused on driving growth in digital streaming and content production, continues to accelerate, with digital profit up 9% and studios profit up 6%.
“Nearly 40% of STV’s earnings now come from these new growth areas as we reduce our reliance on traditional television and create a vibrant, future-facing media business.
“The advertising market showed further resilience in 2022, with STV total advertising revenues finishing only 2% down on our record 2021 performance.
“As expected, given the uncertain economic climate and strong 2022 comparator, STV’s first quarter 2023 total advertising is down by around 15%, though digital on-demand advertising on STV Player is expected to be up around 20% and Scottish SME spend also expected to be flat to slightly up, offering some encouragement for 2023.
“Our advertising performance should also be bolstered by a very strong content line-up which includes exclusive coverage of the men’s Rugby World Cup starting in September.“
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