STV Group’s shares plunged by about a quarter this morning after it issued a profits warning following “further deterioration” in the commissioning and advertising markets.
It said there will be “cost savings” as a result of a downturn towards the end of the first half of the year to the end of June and into the second.
“Our expectations for full year revenue and adjusted operating profit are expected to be materially below consensus,” it said in a trading statement.
Shares in the group closed 49p (25.7%) lower at 142p. Russ Mould, investment director at AJ Bell, said: “It has been caught up in a perfect storm for the media industry. Fewer programmes are being commissioned and advertisers are being more cautious. Weak forward guidance has been a turn-off for investors.”
The Glasgow broadcaster said Incremental cost savings of £750,000 have been identified for the full year bringing the FY25 target to £2.5m.
“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,” it said.
Total Advertising Revenue (TAR) for H1 is in line with guidance. As expected, the second quarter figures compare with a strong comparative last year which featured the men’s Euro 24 tournament.
Expectations for Q3 2025 are lower than anticipated due to the recent further deterioration in the advertising market, it said.
In the programme-making Studios division there has been “significant commissioning market deterioration in late H1 and early H2 as the UK macroeconomic backdrop has worsened.”
Some projects in advanced development have “not being green-lit” and some commissions have been delayed to 2026.
The unscripted division, which covers reality, quiz, entertainment and factual formats, has experienced the biggest disruption. Scripted drama has remained strong.
Due to the changing market conditions the company has updated the phasing and timelines for future deliveries of some projects.
It is currently working on projects for Netflix, Apple, Sky and the BBC. There is no change to its expectations of their financial performance this year.
STV Studios is developing an international business, but most customers remain UK-based and so the division has been disproportionately impacted by the recent slowdown in the domestic market.
The revised full year outlook for STV Studios is for revenue in a range from £75m to £85m at an adjusted operating margin of c.4% as lower activity volumes impact fixed overhead recovery.
The forward order book is now £54m, compared to £66m at the end of April. The reduction is a product of the slowdown in commissions won and the recognition of revenue on programmes in production.
Launch plans for a new radio station are “progressing to plan” along with the creation of a single Audience business providing opportunities to simplify and streamline the operating model.
A further update on the full year outlook and continued strategic progress will be presented at the interim results in September.
Rufus Radcliffe, CEO, 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.
“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.”
Group revenue for the full year is expected to be in a range from £165m to £180m at an adjusted operating margin of c.7%, with £10m of the group revenue range driven by updated Studios guidance.
Core net debt at the end of June was £30m (31 Dec 2024: £29m) with production financing reduced from £10m to £5m over H1 reflecting successful delivery of completed programmes to commissioners.
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