STV Group H1 2025 Earnings Report

STV Group EPS Results

• Actual EPS: GBX 7.10
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

STV Group Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

STV Group Announcement Details

• Quarter: H1 2025
• Date: 9/25/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, September 25, 2025
• Conference Call Time: 7:30AM ET

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.

STV Group H1 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: STV reported steady H1 results with £90 million revenue and £6.7 million adjusted operating profit, and reaffirmed full-year guidance despite market headwinds.
• Negative Sentiment: Advertising remains weak, with total ad revenue down 10% in H1 and Q3 ad revenue expected to fall around 8% year-on-year, leading to the decision to suspend the interim dividend.
• Positive Sentiment: A new cost-savings program aims to deliver a £3 million annual reduction, building on prior measures to secure flexibility on pensions, rephase CapEx, and amend banking facilities.
• Positive Sentiment: STV maintained its status as Scotland’s most popular peak-time channel, STV Player achieved record H1 viewing, and STV Studios has won 13 new commissions in 2025, including the Channel 4 drama Army of Shadows.
• Neutral Sentiment: Chairman Paul stepped down by year-end and will be succeeded by Clive Wiley, who will work closely with existing leadership to ensure a smooth transition.

Presentation

[Paul Reynolds, Chair at STV Group]

All good, thanks Angela. Hello everybody. Sorry about the delay, just a wee technical, but we welcome you to today's presentation on STV Group plc's interim results to the end of June 2025. Importantly, today we've also announced, beyond the results, full details of our response to the challenging market conditions that we're facing at STV Group plc. Rufus Radcliffe and Lindsay Dixon will share full details of our cost-savings program and the additional measures put in place to protect profitability and provide balance sheet flexibility should it be required. Despite current headwinds, there are many positives to be taken from today's announcement. STV continues to hold share as the most popular peak time TV channel in Scotland, and STV Player recorded its highest ever viewing figures for the first half. STV Studios, including its minorities, has secured 13 new commissions in 2025 year to date.

[Paul Reynolds, Chair at STV Group]

Most recently, we won the commission for Army of Shadows, a brand new returnable drama that's been commissioned by Channel 4. All good news. STV Radio, our new proposal that we announced recently, is on track for launch in the coming months. That's just a few of the very positive things happening across the business. We are an ambitious business, and there's a lot to look forward to as we work towards delivering our Fast Forward to 2030 strategy. You may also have seen the news this morning that I will step down as Chairman by the end of the year. I've been with the company for almost five years, and this feels like an appropriate time to step down and for a new Chair to lead the company as it drives through on the Fast Forward strategy.

[Paul Reynolds, Chair at STV Group]

I'm delighted that Clive Wiley has been appointed as my successor, and I'm going to work closely with Clive over the coming few months to ensure a proper and comprehensive handover. Clive brings to STV Group plc really extensive experience and skills acquired across a broad range of sectors, and I really hope he enjoys his time with the business as much as I have. Having grown up watching STV, I'm really proud to have served as your Chair for the past five years, working with a great team to deliver the ambitious and successful diversification strategy, which has built the foundations of the business and will enable us to remain strong. I feel confident I'm leaving STV Group plc in due course in very safe hands with Clive, with our strong and experienced Board of Directors, and with our exceptional leadership team.

[Paul Reynolds, Chair at STV Group]

Now, I'm going to hand over to Rufus Radcliffe and Lindsay Dixon to take you through the details of today's announcement. Rufus.

[Rufus Radcliffe, CEO & Director at STV Group]

Thank you very much, Paul, and good afternoon, everyone. Before beginning, I wanted to also thank you, Paul, for everything you've done for STV Group plc over the past five years, overseeing a period of significant progress and diversification of the business. Obviously, this is your last set of results, and we wish you the very best of luck for the future.

[Paul Reynolds, Chair at STV Group]

Thanks, Rufus.

[Rufus Radcliffe, CEO & Director at STV Group]

Today's interim results are the first following our trading update on July 28. The trading environment in both our key markets, advertising and content, has been difficult. Today, what we want to do is talk in detail about the actions that we've taken and also to reaffirm our long-term strategy and the progress we continue to make, which will build the foundations for future growth. I'll start with the half-year results, which obviously are now a while ago. In H1, we delivered £90 million in revenue and £6.7 million in adjusted operating profit. Q3 total advertising revenue is expected to be down around 8% year on year, as guided, with October looking similar. Visibility beyond that is still difficult.

[Rufus Radcliffe, CEO & Director at STV Group]

The studio's order book at the end of August stands at £40 million, reflecting the continued delivery of scripted programming and fewer commissions being secured and added to the order book across scripted and unscripted. This number also excludes brand new drama Army of Shadows commissioned by Channel 4, which was announced a couple of weeks ago. We've begun implementing a cost-savings program, and given limited market visibility, we're not proposing an interim dividend. Despite the headwinds, we are holding guidance for the full year for the group and our two divisions. We announced in July incremental cost savings of £750,000, and as a result, we are on track to deliver a £2.5 million saving target this year. As we navigate a challenging trading environment, we have taken clear action to protect both profit and cash.

[Rufus Radcliffe, CEO & Director at STV Group]

Firstly, we've launched a cost-savings program that will deliver a £3 million annual reduction in our cost base. This is incremental to the previously announced target of £5 million for full year 2026. Of this, £2.5 million will be realized in 2026, with an estimated £1 million cost of change. Additional savings are being targeted in news. These require changes to our license, and we are in discussion with Ofcom. We've also agreed flexibility on pension contributions with trustees. The 2030 recovery plan remains in place, and we now have the ability to adjust payment timings across 2026 and 2027, helping us manage cash more effectively. In addition, we have rephased non-essential CapEx, ensuring that investment is focused only on strategically important areas. Finally, we have secured amendments to our bank facility, providing additional downside headroom and reinforcing our financial resilience.

[Rufus Radcliffe, CEO & Director at STV Group]

These measures are not just tactical; they are part of a broader plan to ensure STV Group plc is focused, resilient, and more profitable when market conditions improve. Now, to take you through the financial review in more detail, over to Lindsay.

[Lindsay Dixon, CFO & Director at STV Group]

Thanks, Rufus. As I tend to do, I will start with a summary of the key financials for the first half of the year. The group generated £90 million in revenue in the first half, in line with 2024, as the growth of 13% in studios offset the decline in audience. The audience decline was driven by total advertising revenue, which was down 10% year on year, with the 2024 Euros in the comparator the well-trailed reason for this. The largest component of TAR is national linear advertising, which was down 16%, and the regional team delivered a very strong result of 2% growth in the Scottish market. Total digital revenues were just under £11 million and grew by 5%, driven by VOD.

[Lindsay Dixon, CFO & Director at STV Group]

Adjusted operating profit at £6.7 million was down 37% on the first half last year, principally due to the reduction in high margin advertising revenues, and you can see the impact of this on the adjusted operating margin as well. Studios was break-even in H1, in line with last year. Total net debt was £35.7 million, lower than the start of the year, as production financing facilities have been repaid, and we've seen only a marginal increase in our RCF drawings. Moving to the group P&L, there are a few points to highlight. Corporate costs in the first half stand out, given it's gone up year on year. About half of the increase is non-cash and reflects the costs of administering the pension schemes that are reflected in our P&L account. The other main element is for consultancy in support of our Fast Forward strategy.

[Lindsay Dixon, CFO & Director at STV Group]

The underlying costs of the business are well controlled, as you'll see in the profit bridge in a few slides' time. Interest on the group's borrowings is in line with last year at £1.8 million. The balance of the finance costs is non-cash, and it's a small amount of interest on leases and an unrealized loss on foreign currency forward contracts, which offsets the unrealized gain that we recognized in the second half of last year. In terms of adjusting items, I've included an appendix at the end with the detail. The largest item impacting operating profit is a non-cash charge of £2 million relating to the review of our unscripted label portfolio. This is split roughly 50/50 between the writ-off of an investment and a minority stake and a separate writ-off of development stock following our decision to stop new development in STV Studios Entertainment.

[Lindsay Dixon, CFO & Director at STV Group]

Turning to advertising revenue, the table on the left here shows the performance of each main advertising revenue stream in H1 2025 compared to 2024 and 2023, the latter eliminating the effect of the Euros last year. National linear advertising was the poorest performing relative to both 2024 and 2023, with regional linear turning in that strong performance of 2% growth that I referred to year on year and was up 3% on 2023. This really is a testament to the quality of the relationships that the local sales team had with their clients and is particularly notable given the national performance. VOD continues to grow and was up double digit in H1 2025 compared to 2023. Looking to the Q3 outlook, we're maintaining our previous guidance of an 8% decline in TAR year on year, but the components of this have changed a little since the end of July.

[Lindsay Dixon, CFO & Director at STV Group]

National linear is looking to improve slightly to around 10% down, regional worsening to 15% down and arguably catching up with the broader market performance in H1, and VOD growth is expected to be 8% up. Visibility remains very low, and while we have a view in October, we're not guiding beyond that. In overall terms, we're expecting the October ad market to perform broadly similar to Q3, which is a bit disappointing as we would normally expect to see a seasonal uptick at this time of year. Shifting division and moving to studios, the order book trajectory since the start of 2023 is shown on this slide, and you can see that the current position of £40 million reflects the delivery of several large scripted shows over the last 12 to 18 months.

[Lindsay Dixon, CFO & Director at STV Group]

At the end of August, the scripted order book was £18 million, and so much lower than it has been in the last couple of years as revenue has been recognized. It's a clear focus of the team to secure more commissions to repeat the cycle, and we have a number of ideas in advanced development with commissioners that we expect to hear about in the coming weeks and months. We recently announced a new scripted commission from Two Cities for Channel 4 called Army of Shadows, which is a sizable production, but it will flow through our numbers a bit differently. That's because it's a co-production with StudioCanal, and our revenue will be our share of the production fee rather than STV recognizing the full program budget.

[Lindsay Dixon, CFO & Director at STV Group]

Where we might have been adding £15 to £20 million, say, to the order book, we'll recognize a much smaller number, but it will be at a near 100% margin. In terms of unscripted, commissions have been quiet in recent months, albeit the current order book of £22 million is not far below the average of the last couple of years. Given this context, our expectations for studios' performance in 2026 are broadly aligned with this year as conditions do remain difficult. Our teams are continuing to engage with commissioners, and we're confident that our relationships will enable us to drive growth when the macro improves, but as with the ad market, it's difficult to see when that might happen. This chart shows the main moving parts in adjusted operating profit year on year.

[Lindsay Dixon, CFO & Director at STV Group]

The largest bar starting left to right is national linear advertising, which drives more than 70% of the profit decline after taking into account the benefit from the underlying contractual arrangements with ITV that sees our program costs move in line with revenue. This reflects the operating leverage in this part of the business and so is the bit that will come back just as quickly when the market improves as it has done many times before now. Production margin generated in studios is slightly up year on year, but profits are impacted because of the consolidation of labels for the first time, following increases in stake from minority to majority in the second half of last year. The bars towards the right-hand side of the chart reflect changes in the cost base of the business.

[Lindsay Dixon, CFO & Director at STV Group]

We have direct costs which have increased year on year as a result of higher VOD revenues and increased viewing hours. Inflation and increased employers' NI are meaningful for the business, but we've offset most of these cost increases through the savings, which is the large green bar towards the right-hand side there. Turning to cash and net debt, the group has net debt in relation to its RCF of just over £30 million at the half year, not dissimilar to the opening position. Production financing loans are being repaid as cash is collected from commissioners and programs delivered. Leverage at the half year was 1.6 times, well within the covenant limit. Net debt will increase from here to the year-end, however.

[Lindsay Dixon, CFO & Director at STV Group]

Our RCF drawings are slightly higher now than at the half year, and we'll need to draw down further in the next few weeks, given the quieter Q3 and the true up payable to ITV under our contracts. From a modeling perspective, I'd suggest you assume £45 to £50 million for net debt at the end of the year, including production financing. Following our trading update in late July, we've taken a number of measures to provide the business with additional cash management flexibility and incremental headroom. These measures included securing a slightly larger RCF and some covenant amendments during 2026. I'll stress here that our central forecast is not predicated on us using these amendments. Rather, this was a proactive measure given the market uncertainty and lack of visibility, and it allows us to focus on trading performance and delivery of the strategy.

[Lindsay Dixon, CFO & Director at STV Group]

On pensions, we remain on track to achieve full funding on a technical provisions basis by October 2030. The accounting deficit has reduced over the first half of the year and is lower than it was 12 months ago. Within our recovery plan, we've agreed contribution payment flexibility with the trustees that allows us to defer payments during 2026 into 2027. Of the £10 million that would have been payable in 2026, we can pay up to £9 million in 2027, along with the contributions for that year. This gives significant flexibility during 2026. It's also worth noting that we'll be in discussion with the trustees throughout 2027 to agree to the next triennial valuation, which is due at the end of December 2026. The last thing I wanted to talk about was the group's cost base and how we've developed our savings plan.

[Lindsay Dixon, CFO & Director at STV Group]

This slide looks to break down the cost base into its key component parts and reflects the current position. It excludes direct program production costs, which are met by the commissioner and vary directly with revenue. One third of the cost base relates to contractual payments to ITV under the longstanding arrangements in place. About one quarter of these payments are inflation-linked, but three quarters vary with revenue. The variable element is our contribution to the Channel 3 national program budget, where the amount we pay varies from one year to the next in line with national advertising revenues. When national advertising revenues go up, our costs go up, and as is relevant in the current climate, when revenue goes down, our costs go down. The largest single element of our cost base is people, who comprise around 40% of the total.

[Lindsay Dixon, CFO & Director at STV Group]

Taken together with payments to ITV, these two categories comprise 75% of our cost base, with the remaining 25% across a number of different areas, each no bigger than 5% of the total. These include direct costs, non-cash items, PSB and license obligations, property costs, etc. The direct costs are predominantly in the digital part of the business and are revenue share payments for player content and ad serving and related costs that vary with activity and volume of viewing. It's also worth noting that in this analysis, the costs of the news team are included under people, with the other PSB costs being transmission, Ofcom, etc., that's shown separately on the right-hand side. Of the people costs, around 35% are direct sales teams, which is roughly 15% of the total cost base. This means that our addressable cost base is around 40% of the total.

[Lindsay Dixon, CFO & Director at STV Group]

This assumes that costs to ITV and direct sales teams are not addressable, nor are those other costs that are incurred in direct proportion to revenue or activity. We've also assumed that non-cash costs, predominantly depreciation, are addressed through review of the CapEx plans for the business. Our approach to building our plan has been tailored to each individual part of the business and has sought to answer the questions, what's the primary role of the team? Are there technology advancements that would enable us to be more efficient? Do we expect activity levels to go up or down in the future? Do we need to do this activity at all? We've then made decisions based on the answer to these questions and have identified full-year savings of £3 million so far.

[Lindsay Dixon, CFO & Director at STV Group]

These are in addition to the existing cost-saving target previously published and have been enabled in part by decisions taken earlier in the year to merge broadcast and digital. The full amount is within our control to deliver, and actions are being taken immediately to maximize the P&L and cash benefit whilst treating our people properly through what will be an unsettling time. We recognize that our news provision is a key part of being a PSB, but it's also a significant cost to the business. We've identified changes we'd like to make, but these require changes to our licenses and so need Ofcom's agreement. We're in discussion with Ofcom, and any savings we can realize here will be incremental to the numbers on the slide. The cost of change associated with the changes identified so far is estimated at around £1 million.

[Lindsay Dixon, CFO & Director at STV Group]

I'll now hand back over to Rufus, and he'll take you through the strategy update and outlook.

[Rufus Radcliffe, CEO & Director at STV Group]

Thank you very much, Lindsay. As you've heard, the short-term environment is difficult, and at times like this, it can be understandably hard to focus on the longer term. We've moved really quickly to respond to market conditions, but whilst ensuring that STV is resilient today, we also need to ensure that we are well set for when market conditions improve. That means staying committed to our strategy and adapting where necessary. Since our strategic update in May, there has been good progress. In May, we said that an important part of running the studios division is active portfolio management, and you will have seen today that we have made the decision to stop development activity in STV Studios Entertainment and make no further investment in Mighty Productions. This is a response both to current market conditions, but also our long-term view of where content demand lies.

[Rufus Radcliffe, CEO & Director at STV Group]

Premium drama remains very much in demand, and we are delighted that Army of Shadows, another high-profile commission for Two Cities, the makers of Blue Lights and Amadeus, has been secured, another returnable piece of IP with international appeal. We've made good progress bringing our broadcast and digital divisions together. This avoids duplication. It also simplifies and focuses our overall viewer and advertiser proposition. Linear viewing declines have been partially offset by the highest ever STV Player viewing in H1, which has continued also throughout the summer months. In a few moments, I'll also talk to you about the launch progress on STV Radio, and we are in discussions with Ofcom about changes to our licenses to support news cost savings. This will enable us also to accelerate our digital ambitions to future-proof news and bring in younger viewers.

[Rufus Radcliffe, CEO & Director at STV Group]

This is our simplified structure and strategic focus which we showed you in May, and this organizational design helps us navigate our current environment, but also help unlock future growth. We are creating an STV that will continue to be Scotland's leading platform for audiences and advertisers through our audience division, and we will be a globally recognized content powerhouse through STV Studios. This gives us huge regional strength in Scotland and international ambition, and our strategy is built around two pillars: building and monetizing the audience, delivering a high-reach video and audio proposition across the STV channel, STV Player, and our soon-to-be launched STV Radio. We're also expanding our advertising proposition with advanced formats and new targeting capabilities, remaining relevant to both mass market advertisers and those looking for enhanced targeting.

[Rufus Radcliffe, CEO & Director at STV Group]

We are driving content growth through STV Studios, delivering high-quality IP with strong returnable potential, and we are making sure we have the best portfolio for now and for the future. This structure is right both for current market conditions, but it will also deliver long-term value creation. We are responding to challenges, but we are also building a business that can thrive when conditions improve. Let's take a look at the audience division first. We know there is structural viewing decline, but STV continues to have scale and reach. In H1, STV reached more than three quarters of all Scots every month, over half of Scots every week, and almost a third of Scots every single day. On the right-hand side, you can see that we continue to be the destination for scaled audiences. 96% of the top 500 audiences in H1 were on STV.

[Rufus Radcliffe, CEO & Director at STV Group]

As we mentioned earlier, STV Player had its biggest ever first half, even without the men's football Euros from last year, with an increase of 8% in viewing. If you look at third-party content, we had even stronger growth at 16% through smart content acquisitions from the team across a range of British and U.S. titles. STV Player continues to be an effective way of capturing younger viewers, with over 54% of drama consumption from under 45s now coming through the service. You saw this slide in May, but I'm showing it again. It's a clear visual demonstration of how complementary radio is to our existing viewer proposition. Radio listening is strongest in the morning and TV in the evening, but also radio listening remains strong and resilient and is being enhanced rather than disrupted by the digital world, which is offering more ways to listen.

[Rufus Radcliffe, CEO & Director at STV Group]

In fact, commercial radio listening is growing across the UK and even more in Scotland, and we have a strong marketing platform and the power of the existing STV brand as well. The ramp-up to launch has started. There is already significant brand awareness. You can see a snippet of some of the coverage we generated when we announced our plans to move into audio in May. The Ofcom license has been granted. We announced Tunnux this week as our first confirmed advertiser on the service with a six-month deal. The presenter lineup is taking shape with Breakfast Morning and Drive Time Talent confirmed. As you can see from this slide, STV's advertiser proposition continues to develop.

[Rufus Radcliffe, CEO & Director at STV Group]

We are able to offer brands mass audiences, and there'll be none bigger than in the 2026 Men's World Cup next year. We are able to offer regional targeting, but we're also able to offer micro-targeting, delivering for new to TV advertisers in a cost-efficient way. We have been running pilots recently with low-cost AI-generated creative from STV for local clients in Scotland, and early results are very encouraging. We are launching other additional formats. Pause ads have gone live last week on STV Player on the browser, and we'll launch on all major platforms in time for the return of I'm a Celebrity. These are ads that are served on screen when the video is paused. Next year, we are planning to launch linear ad replacement, where we can serve different ads to different people within the same 30-second time length to maximize yield and targeting.

[Rufus Radcliffe, CEO & Director at STV Group]

Even though viewing habits are changing, TV advertising also continues to work, and priority number one, as we know, for all marketing departments is effectiveness. TV is the greatest driver of ad-generated profit, with a 5.6 times return on every pound invested. TV and radio combined can improve cost-effectiveness from brand campaigns by over 20%. Now let's turn to news. News is a vital part of the STV brand, and STV News remains the most watched program at 6:00 P.M., beating the BBC. We want to protect STV News for the future, and that means making sure that it has a big digital as well as broadcast impact, but importantly, that it is also on a sustainable cost footing. To do this, we are in discussions with Ofcom about a simplification of our news license requirements.

[Rufus Radcliffe, CEO & Director at STV Group]

We are consulting with them about enabling both licenses to co-produce one show for Scotland and remove all regional opt-outs. If we are successful, this will deliver additional savings beyond the £3 million announced. Now to STV Studios. We have talked about the slowdown in UK unscripted PSB commissioning, but we have a highly competitive set of creative labels, and we believe we are outperforming the market. We remain focused on returnable IP and long-term value creation. In scripted, there is a lot going on, and it is on plan. Blue Light Series 3 is returning on Monday, and the BBC are doing a huge campaign to support its return. Amadeus, The Story of Mozart, is launching by the end of the year on Sky. Criminal Recall 2 has now been filmed, and scripts for Series 3 are in paid development.

[Rufus Radcliffe, CEO & Director at STV Group]

The Witness, our first ever commission for Netflix, has been delivered, and we have already talked about Army of Shadows for Channel 4. Unscripted is harder at the moment, but year to date, we have had 15 returning series and 12 new and potentially returnable series, and returning series are obviously a key metric of success for studios. We also have a really strong customer base, and our secondary sales revenue, which is at a very high margin, is on a par with the first half of 2024. We are confident that the long-term fundamentals for our studios business are strong. We have extremely strong relationships with broadcasters, streamers, and international co-producers. The UK is the number one place in the world in creating big IP formats, and global demand for premium drama will remain strong.

[Rufus Radcliffe, CEO & Director at STV Group]

We are a leading nations and regions producer, and PSBs need to actively commission out of London, and there is no better place to do that than Scotland. We have strong returns from our recent investments, with momentum in labels like Hello Halo, based here in Glasgow, Tuesday's Child, and Crack It. When market demand returns, we can scale up quickly through freelance talent without increasing our permanent headcount. If that is the long term, we obviously also need to focus on the now. As mentioned, as a response to the unscripted market conditions, we've made the decision to close STV Studios Entertainment for new development, and there'll be no further investment in quiz label Mighty Productions. We are laser-focused on right-sizing our development spend. We have very clear priorities over the next six months.

[Rufus Radcliffe, CEO & Director at STV Group]

In terms of the audience division, we want to continue the strong viewing momentum we've had year to date on STV Player. We are expanding our advertising proposition through some of the products I talked about earlier, like pause ads and the greater targeting capabilities to unlock incremental revenue. We're going to launch STV Radio, and we're going to start the changes to our news output, delivering a more cost-effective, digitally focused service for our viewers. We will continue to actively manage our studios' portfolio of labels, right-sizing our development spend to reflect current market conditions, focusing on returnable IP with strong margin potential, and we will be leveraging our nations and regions status to remain a preferred partner for PSBs. All of this will be underpinned by our new cost-savings plan that we announced today to ensure that STV emerges stronger and more profitable when market conditions improve.

[Rufus Radcliffe, CEO & Director at STV Group]

Before we turn to Q&A, I wanted to quickly turn back to the bigger picture. Despite the challenges we faced, we have a short-term and a long-term plan. In the audience division, we are driving digital revenue growth, expanding into audio, and continuing to deliver mass commercial audiences. At the same time, we are managing costs strategically to ensure long-term sustainability and growth. In studios, we are led by world-class creative talent with brilliant relationships with customers. Our focus, as I've said already, is developing returnable IP with international appeal. We are maintaining a strong development slate with strong cost discipline as well. We are not just reacting to market conditions. This is a business that is adapting, evolving, and positioning itself for long-term success. Now to questions. Who wants to go first? Alastair's got his hand up.

[Rufus Radcliffe, CEO & Director at STV Group]

Hi guys, thanks very much for the presentation. On studios, your RNS alludes to some commission decisions over the next couple of weeks, and I know that visibility is very low, but I wonder if you might be able to give us a steer for total order book expectations as we exit 2025. Thanks very much. I'll go on, and you go ahead.

[Lindsay Dixon, CFO & Director at STV Group]

I was just going to tell Alastair that we're not going to give him the number he's looking for, but you might have had an answer he would have liked better. At the minute, we've got a £40 million order book, £20 million of which will be delivered or will result in revenue in 2026. We don't have included in that yet returning series that are stalwarts of our production labels, if you like, and are recommissioned year on year because they work on a relatively short cycle, and they tend to just be added in year and then delivered in that year. You should assume that there is a recurring amount that would be added to that £20 million.

[Lindsay Dixon, CFO & Director at STV Group]

The other thing that we don't include in there is secondary sales revenue, which doesn't flow through the order book because it's based on license start dates, and that doesn't necessarily always happen at the same time every year. It's also not something that you have a run into. It's just it's re-licensed or it's not. There's £20 million that's already there for next year. You're right, there are a few that we are hoping to hear commissioning decisions on, which are a mix of scripted and unscripted. There would be some meaningful revenue items in there. I think that is probably as much as we can give you at this point in terms of numbers, Alastair. That in itself was very helpful. Thank you.

[Rufus Radcliffe, CEO & Director at STV Group]

I think Andy, you had your, you originally were clapping, I think.

[Andrew Renton, Director - Research at Cavendish]

I clicked the wrong one, I think.

[Rufus Radcliffe, CEO & Director at STV Group]

I think you were next, so go for it.

[Andrew Renton, Director - Research at Cavendish]

Great, thank you very much. Yeah, a few from me. Rufus, you mentioned sort of a new micro-targeting. Was that a development or improvement on the linear or digital side? Can you just explain that a little bit more?

[Rufus Radcliffe, CEO & Director at STV Group]

Yeah.

[Andrew Renton, Director - Research at Cavendish]

Lindsay, you said that you'd normally expect a seasonal uptick at this time. Any feedback as to why that hasn't happened in your view? Anything more on Fan Club and how that's coming on?

[Rufus Radcliffe, CEO & Director at STV Group]

Okay, I'll take one and three, and then Lindsay to the seasonal uptick. What we are very focused on is expanding our advertising proposition so that we can play in the big mass audiences and also deliver more targeting propositions. Obviously, radio is the next stage in the development of our advertising proposition as well. In terms of the micro-targeting, what we are able to do, this will be on STV Player, but also on linear viewing on the STV channel delivered through IP. More and more viewing is now done entirely through IP without an aerial. We can offer much, much greater granularity of targeting. We can serve ads on a postcode basis, but we've also got additional targeting capabilities based on the information that we have from our users as well.

[Rufus Radcliffe, CEO & Director at STV Group]

The exciting thing about this, and we talked about this at the Capital Markets event in May, is that we think there is a large addressable advertising base in Scotland who are currently spending a lot of their money on Facebook, well, Meta and digitally, because TV historically for them has had keep-out signs, whether it's production costs or cost of media. Now we can offer, longer term, the same targeting capabilities. This is just to manage expectations. This is not an overnight thing. This is something that's going to develop over 2026 and 2027. Even the trials that we've had with small advertisers in Scotland over the last few weeks have had some interesting early results. I think the other interesting thing on the micro-targeting is we are producing the advertising for them.

[Rufus Radcliffe, CEO & Director at STV Group]

Through a very simple AI-generated software, it can pull together all of the creative assets they have. It can also have an automated voiceover, and it can create the ad incredibly cost-effectively for them. Some of the ads that we've seen created by this software have been really, really impressive. We're really excited about that. I'll just carry on with Fan Club, and then I'll throw it to Lindsay. Fan Club, yeah, very excited, joined the group in May. It's a bit like the commissioning thing of we're about to announce some stuff, but there's been a lot of interest. Joe Churchill's got a very good network of connections in the advertising space. We will hopefully have some good news for you on that soon, but he only joined in May, and things are going well. Lindsay, why don't you take the advertising question?

[Lindsay Dixon, CFO & Director at STV Group]

Yeah, no problem. Hi Andy. I think there are a few things at play here. Ordinarily, September, October, and November are the strongest three months of the year, and that coincides with people coming back from summer holidays. All the big entertainment and dramas are put on the channels, and the advertisers are building up to the end of the year and the Christmas period and all the rest of it. I think what we are seeing just now, I don't know this, but my sense is that for some businesses, the fact that it took an awfully long time to get clarity on what was coming through on less healthy food advertising and what would and wouldn't be permissible.

[Lindsay Dixon, CFO & Director at STV Group]

You've got some advertisers who have had to get in their Christmas stock and have now discovered that what they've bought in is perhaps not fitting with the less healthy food regulation. There might be a bit of that. I think there is a bit of people wondering what the UK budget is going to look like and just generally feeling a little bit uncertain about the world. I don't, as I say, I don't know that. That is the sense that I'm getting, and hopefully that gives you some color.

[Andrew Renton, Director - Research at Cavendish]

Great, thanks both.

[Analyst]

I don't know who's next. Why don't I just, Gavin, your hand's up. I'll go to you next. Hello. Hi Gavin.

[Analyst]

Thanks very much, and thanks for that. Just two quick questions. Have you got any studio contingent payments? Also, I've got LinkedIn to expanding your RCF, and just a sort of flag waving, but I would have thought the Hollywood elections would actually be a positive as well for you this coming year.

[Analyst]

I'll take the Holyrood elections. Next year is a big year for Scotland. Whilst the Commonwealth Games are on the BBC, the Commonwealth Games is an opportunity for Scottish brands to get behind that event that's going to be in Glasgow. We know it's a scale-back thing, but that is a big thing for Scotland, and the Holyrood elections will be. I think advertisers tend to stay clear of live debates and election coverage generally because they don't want to take a view on that stuff. I wouldn't say elections are necessarily an advertising positive thing for us, but I would say, and we've said it earlier on, the Men's Football World Cup next year, that there are more free-to-air ad-funded games on STV than ever before in the summer next year, and that will clearly generate advertising demand. Lindsay, why don't you take the studios one?

[Lindsay Dixon, CFO & Director at STV Group]

On the studios, we don't have any payments to be made in the balance of this year. There are some next year. They will go out in the second half, which is helpfully timed because hopefully a very successful World Cup will have brought some cash positivity and profitability. I think the number that most people have got in their models is around about £7 million in the second half of next year. Thank you.

[Analyst]

I'll throw to Darin.

[Analyst]

Thank you. I've got two questions. One, Lindsay mentioned that there's a charge for consultancy in the year. I wonder if you can quantify that and why that was necessary. The second question is about dividends. Dividends are very important to our clients, and obviously it's disappointing what's happened. Understandable, disappointing. If you're going to defer, say, £9 million of pension payments till next year, it sounds as if we're not going to be looking forward to a dividend next year as well. Is that the vision at the moment?

[Lindsay Dixon, CFO & Director at STV Group]

Why don't I try and take those? On the consultancy, in a normal world, I wouldn't have mentioned it, Darren, because it's a point one or a point two. I knew that as soon as I put a slide out there that had corporate costs going anything other than flat to down, people's antennas would go up, if you like. It's not a big amount of money. We are a small team internally, and what we wanted to do was to make sure that we were properly lifting our heads and looking beyond. When I say we got consultancy support, it was not through one of the big, large consultancy firms. It was two people that were contacts that Rufus had through past lives that came in and provided an extra couple of pairs of hands as we were doing it, and it attracted a cost. That's that there.

[Lindsay Dixon, CFO & Director at STV Group]

From a dividend perspective, the banking amendments and the pension flexibility are intended to give exactly that flexibility and incremental headroom. It's much better and easier to put in place those insurances and assurances, if you like, when you don't think that you need them, and you have a base case of trading that doesn't assume that you need them and doesn't assume that you have some big bounce back in the economy. Think about those as insurance flexibility to give us as much scope as we can to really focus on trading through these tough times and delivering on the strategy at the same time. You will have seen that we have announced, and Paul and Rufus both mentioned earlier, that we've got a new Chair coming in and taking over by the end of the year.

[Lindsay Dixon, CFO & Director at STV Group]

We have deliberately not talked about dividends beyond the interim for 2025 because it doesn't feel right to be making statements longer term, given that we've got that change happening. That's why we've said what we have on that. Thanks, Lindsay.

[Analyst]

Okay, Jonathan?

[Analyst]

Good afternoon. I've got three questions left. Firstly, could you talk us through what the normal uplift from a World Cup is on ad revenues, just to give us a feel for what the possible delta is there? Secondly, just looking at content demand, from your sort of feel from the marketplace and who you're talking to, and perhaps these projects that you're currently trying to close and secure as orders, can you give us a feel for where you think the market might pick up first? Is it domestically? Is it internationally? Is that affecting the way you manage the labels at all? Lastly, could you just give us a reminder on the triennial pension cycle and share any thoughts you might have on whether or not those payments could be varied, not from a timing perspective, but in terms of quantum?

[Rufus Radcliffe, CEO & Director at STV Group]

Thank you.

[Rufus Radcliffe, CEO & Director at STV Group]

Let me have a go at the first two. I don't think we should be giving out specific numbers on what we think the World Cup effect will be. What we do know is that in 2024, obviously, the men's Euros was enormous. We also don't want to rely on Scotland qualifying for anything as well, although they've got off to a good start. What we do know is that mass events where everyone gathers around the TV and watches it together are at a premium now as viewing gets fragmented and moves into different areas. That's why it will generate strong advertising demand. Actually, putting a number around it is difficult, but we know that it will be a good stimulus for around the summer next year. In terms of content demand, the drama side of our portfolio is on track and doing well, as we talked about earlier.

[Rufus Radcliffe, CEO & Director at STV Group]

I think there is very good momentum there. Two Cities in particular have had a very strong year and have got a very interesting pipeline as well. In terms of unscripted, it will always be an important part of any broadcaster and streamer's portfolio. There will come a point where they need to fill their services and they need to fill their channels, and it will come back. Calling out at what point that is is difficult. I think we've been quite cautious about our view of 2026 for studios. I think that's a sensible place to be because I think visibility both in advertising and in the content market is tough. We are confident with the portfolio of labels we have in unscripted, the brilliant creative leaders that we have, and the ideas that they're generating that it will come back.

[Rufus Radcliffe, CEO & Director at STV Group]

It's just the time that we're having this update with you at the moment is the markets are suppressed, and that's the situation we find ourselves in. Lindsay, anything to add on those before I throw to you for the third question?

[Lindsay Dixon, CFO & Director at STV Group]

Yeah, I was maybe going to offer up a number on World Cup, but not in a silly way. What I was going to say was in a month that you've got meaningful sporting activity like that, you can see a 20-30% year-on-year improvement in that month. If you think about the shape of advertising across a year, the months that that falls in, and then you were to take that sort of peak in that month or two and then apply it across the full 12 months, you might see 3-5% uptick on a full year basis of something like that. That is like quick maths in my head done to give you an illustrative order of magnitude, but might be helpful. On the content piece, one of the things that we had been hoping to achieve this year was to make some headway in the U.S.

[Lindsay Dixon, CFO & Director at STV Group]

market, in particular from a production perspective. I don't mean spending a lot of money to go and get some boots on the ground in a building and all the rest of it. I mean coming up with really strong IP, leveraging contacts with the labels to try and get co-production or formats or whatever it is away in that market. That hasn't happened, which is one of the reasons that the slowdown in the UK PSB commissioning unscripted market has had such an effect on us because one of our hedges, if you like, just hasn't come across because of the state of the U.S. formats market itself. It does feel to me that with everything else that's happening in the U.S.

[Lindsay Dixon, CFO & Director at STV Group]

at the minute, it might take a little bit longer for that to come back or stabilize, particularly for somebody like a new entrant trying to get in. That little bit of extra color there. On the triennial and the pensions, the next triennial is due at the end of December 2026. We will be negotiating that with the trustees during 2027. We are on track at the minute. The funding level is improving in the schemes. As the funding level improves, our options around whether there are ways to accelerate moving this off our balance sheet altogether become more feasible. I'm not sure there's anything that falls into that category just yet, but it is moving in the right direction. The flexibility that we have agreed with the trustees doesn't risk the October 2030 end date of the recovery plan that we have just now.

[Lindsay Dixon, CFO & Director at STV Group]

It is purely moving money around, if you like, in the first 12 to 18 months. Hopefully that gives you a little bit of extra context there as well, Jonathan. Lovely, thank you.

[Rufus Radcliffe, CEO & Director at STV Group]

Right, I think I've got two, I can only see two more hands up here. Gareth?

[Analyst]

Thank you. Just one from me, actually. On the advertising side, it was interesting you put the +3% comp of H1 versus 2023, obviously where there's no other major sporting events. I just do ask, was there anything unusual or sort of specifically weak about 2023 as a comp? Or is that +3% a reasonable proxy for sort of the underlying resilience of the advertising picture, both linear and digital combined?

[Analyst]

I think it's absolutely a resilience proof point. One of the reasons that I say that is when it gets to the month of July this year, actually, the 3% growth that we saw first half 2025 on 2023 of plus 3% actually in the month of July swung to a minus 3%. It just shows what happened in the broader macro from June into July, if you like. It's absolutely continued growth and strength in digital, continued growth and strength in regional, and actually a national market that wasn't behaving much differently to the slow long-run declines that we had been seeing up to that point.

[Rufus Radcliffe, CEO & Director at STV Group]

Sure, okay, that's great. Thank you very much.

[Rufus Radcliffe, CEO & Director at STV Group]

The underlying resilience is because TV advertising works. Ultimately, that's the most important thing for any marketeer. Thanks, Gareth. Roddy?

[Analyst]

Yeah, hi, good afternoon everyone. Thank you guys for the presentation. Somewhat unnecessary dig at Scottish football, I thought there, Rufus, but there we go. I thought I'd let you make that point, Roddy.

[Analyst]

Probably entirely accurate, to be fair. Just a few questions, maybe to sort of wrap up for me. Firstly, say thanks for the update on radio. Could you just give a little bit more of a sense for what the sort of physical building blocks are that remain in terms of launching the service? I'm already thinking that you're probably sort of thinking, you know, early next year in terms of timing. Also on that, just wondering if, and I guess the answer is probably yes, but just wanted to check that you remain as confident as you did before in terms of what you're seeing on potential consumption, market environment, etc. A couple of quick things on the player. Just wondering in general terms if you get any sense of subscription fatigue out there and whether that might be providing impetus for free-tier VOD services in general.

[Analyst]

Also just interested in sort of reflecting on the Premier Sports initiative and whether you feel that that has sort of created impetus and a precedent for other commercial initiatives. Finally on news, obviously very important to look for efficiencies, but as you've sort of highlighted, news has always been a real cornerstone of your audience reach. I'm just wondering how you plan to ensure that you sort of strike the right balance there between changing the offering but also maintaining that audience position. Thank you.

[Rufus Radcliffe, CEO & Director at STV Group]

No worries. Okay, let me, some good questions, Roddy. On radio, we are bang on track. The radio studio is being built in PQ, and I'm actually quite relieved you can't hear any banging at the moment because that is being built at the moment, and that is obviously a big milestone. The other stuff that we're on track is finalizing the distribution footprint. The Ofcom license, as I've talked about, has already been secured. The big thing that we are doing in the next couple of weeks is the big go-to-market strategy for our advertisers. Although we have announced yesterday that Tunnux will be our first advertiser, which is quite nice because Tunnux were our first advertiser on TV back in 1957 as well. There is a big B2B commercial launch, although we've already had a lot of interest from advertisers out there.

[Rufus Radcliffe, CEO & Director at STV Group]

Obviously, what we're finalizing now is the go-to-market plan, the marketing plan, the identity, the brand, and all of the stuff that you would expect. We are utterly convinced by the gap in the market for a mainstream music station from Scotland for Scotland. There are lots of commercial radio stations that have exited that space, and we remain convinced that this is a big growth opportunity for us. That's radio. In terms of STV Player, in terms of subs fatigue, I wouldn't call it subs fatigue. I would say that people are staying very firm with the subscriptions that are working for them, but they're probably having a smaller range of subscriptions than they have had previously. There aren't many people who are moving away from Netflix, for example, but people are having a more consolidated range.

[Rufus Radcliffe, CEO & Director at STV Group]

I would say that that may in the long term benefit free-to-air streamers, you know, whether it's STV Player in Scotland or ITVX outside of Scotland, that could happen. Obviously, in a cost of living crisis, when people haven't got as much money as they had previously, people are being very sensible about it. In terms of Premier Sports, look, I think one of the things that we are trying to do as an organization is, I think I'm a great believer, as is the team, on what strategic partnerships could we have out there, who can we work with, what interesting arrangements could we have. Premier Sports is just one of them. We are in subscription to give us strategic optionality. We don't think it's going to be front and center in the future of our business.

[Rufus Radcliffe, CEO & Director at STV Group]

We feel that in the audience division, it's absolutely about having a future-proof digital advertising proposition, but it's good to have that strategic optionality out there. Finally, on news, we've been very, news is a big strategic asset for STV. There is no doubt about that. We beat the BBC every night at 6:00 P.M. The quality of our journalism, the stories we tell are extremely important, and we remain absolutely committed to that. The changes that we're proposing to make to news do not change the regional footprint of news. We will still have boots on the ground all over Scotland, the same quality journalism, but what we are doing moving forward, as many people get their news consumption digitally at different times of the day, is that we are simplifying the 6:00 P.M.

[Rufus Radcliffe, CEO & Director at STV Group]

It will still be the best news for Scotland at 6:00 P.M., but we're simplifying it with a more sustainable cost base. We are not out of kilter with anyone else on this. Ofcom have said themselves that the long-term regional funding of news is under threat, and it's very difficult. We've obviously been in discussions with them already, and we will continue to be so. We are mindful of what does a new sustainable cost base look like for news, whilst also delivering the news that matters for Scots every day of the week. We've been very, very careful about that, as you can imagine, the sensitivities around that are very high. I hope that answered your question.

[Analyst]

Yeah, no, that's very useful. Thank you.

[Rufus Radcliffe, CEO & Director at STV Group]

Okay, Lindsay, any builds from you?

[Lindsay Dixon, CFO & Director at STV Group]

No.

[Rufus Radcliffe, CEO & Director at STV Group]

Okay, right. Any thumbs up anywhere? Or thumbs down? No? If there are no further questions, I think we'll probably end this call now. Thank you very much for your time today. It's much appreciated.

[Paul Reynolds, Chair at STV Group]

Thank you both.

[Lindsay Dixon, CFO & Director at STV Group]

Bye everyone.

[Rufus Radcliffe, CEO & Director at STV Group]

Bye.

Participants

Executives

• Paul Reynolds, Chair
• Rufus Radcliffe, CEO & Director
• Lindsay Dixon, CFO & Director

Analysts

• Andrew Renton, Director - Research at Cavendish
• Analyst