STV Group – this unique £83m media group is trading on 7.3 times historic and just 5.4 times current year earnings, results due tomorrow, shares 178p, brokers TP 382p

10.03.2025

Tomorrow morning STV Group (LON:STVG) will be announcing its Final Results for its year to end-December 2024.

They are expected to report higher sales and slightly lower adjusted pre-tax profits – but that does not stop me from still favouring the group’s shares at their current 178p, valuing the media group at only £86m.

The Business

STV Group is the Glasgow-based digital media company whose principal activities of are the production and broadcasting of television programmes, the provision of Internet services and the sale of advertising airtime and space in these media.

The Company's segments include Broadcast, Digital and Studios.

STV Studios – The Award-winning production business is one of the UK’s leading producers of scripted and unscripted content and Scotland’s biggest production group, boasting over 20 production labels across every genre, from quiz to documentary, factual, entertainment and drama, creating world-class content for a range of UK and international broadcasters and streamers.

STV Digital - STV's rapidly growing broadcaster streaming service, STV Player, gives viewers in Scotland the opportunity to watch STV shows on their terms, live or on demand.

Across the UK, its free service offers viewers an extensive catalogue of content from the UK and around the world.

STV Broadcast – The Group’s Broadcast division runs the commercial Public Service Broadcaster, STV, which operates the Channel 3 licenses across central and north Scotland.

STV offers viewers a strong network schedule of programming alongside its own locally produced news, current affairs and factual entertainment shows.

Full-Year Trading Update

On Tuesday 26th November last year, the Group declared that its performance had been in line with market expectations for its full-year despite continued challenging advertising and commissioning market conditions.

It noted that STV Studios had a strong forward order book of some £92m, as at the end of October.

It also guided that advertising revenues in its final quarter could be some 10% lower with strong comparators like the Rugby World Cup.

However, a cost-saving plan could have reduced expenditure by around £1.5m for the year.

Management Comment

At that time, recently appointed CEO Rufus Radcliffe stated that:

"I joined STV on 1st November and have been very impressed by its strong foundations and prospects for future growth.

I've been struck by the creativity, dynamism and commitment of the team and I look forward to working closely with them to build on recent successes.

There's no doubt that we continue to operate against a challenging advertising and commissioning backdrop, and we will continue to take action to mitigate against that where possible.

The acquisition strategy in STV Studios is helping us to deliver in a tough market, with new commissions secured for original formats since our interim results.

We expect the full year TAR (total advertising revenue) to be up 2-3%, boosted by the Euros earlier this year (2024).

The winter schedule brings the return of entertainment juggernaut, I'm A Celebrity Get Me Out Of Here, and The 1% Club.

And looking further ahead, we have a strong drama offering at the start of 2025 on STV and STV Player."

Recent Contract Wins

On Tuesday 3rd December last year, the Group announced that STV Studios has been commissioned to produce three more series in its hit Auction House franchise for Warner Bros. Discovery UK & Ireland channel, Really - a total of 37 hour-long episodes.

Craig Hunter, Creative Director of STV Studios Factual, commented:

"This is a brilliant vote of confidence in the Auction House franchise from Warner. Bros Discovery and we're delighted to be back in production with three new series of what has proven to be a winning format.”

Then on Wednesday 5th February this year the Group declared that it was entering a new partnership between sports provider Premier Sports and its streaming service

STV Player, which will bring together all the heart-pounding, edge-of-your-seat moments that unite live sports, TV drama and soaps - in one place.

The two partners have joined forces to offer viewers an exclusive and competitively priced package of top-flight sports plus ad-free high-quality drama box sets, true crime documentaries and entertainment juggernauts via STV's streaming platform, STV Player.

Richard Williams, MD of STV Digital, commented:

"We're thrilled to be partnering with Premier Sports to offer viewers the perfect mix of ad-free TV shows and thrilling live sport all in the one place.

STV Player is no stranger to major sports tournaments, with the likes of the UEFA Euros, FIFA World Cup and Rugby World Cup all delivering record-breaking audiences for our streamer.

This partnership with Premier Sports significantly elevates the sports offering via our platform whilst, at the same time, bringing our vast range of high-quality content to a raft of new viewers."

The Equity

There are 46,722,499 shares in issue.

The larger holders include Slater Investments (19.24%), Aberforth Partners (9.02%), M&G Investment Management (7.65%), AXA Investment Managers (6.71%), Schroder Investment Management (5.64%), Lombard Odier Asset Management (5.06%), Janus Henderson Investors (5.06%), Harwood Capital (4.29%), Columbia Threadneedle Asset Managers (4.28%) and Unicorn Asset Management (4.20%).

Broker’s Views

Analyst Johnathan Barrett, at Panmure Liberum, rates the Group’s shares as a Buy, with a Target Price of 382p.

For the year to end-December 2024 he estimates that sales were £176.0m (£168.0m), with pre-tax profits of £16.8m (£17.2m), easing earnings to 24.2p (25.5p) but maintaining its dividend at 11.3p per share.

For the current year he looks for £210.0m sales, £22.8m profits and 33.0p earnings whilst keeping that 11.3p per share dividend.

Next year, Barrett reckons the sales could be £250.0m, with £29.7m profits generating 44.0p in earnings and still paying the 11.3p dividend.

Alasdair Young, at Shore Capital Markets, has a 373p a share valuation.

For 2024 his estimates are £171.3m revenues, £18.2m adjusted pre-tax profits, 27.4p earnings and a 12.0p per share dividend.

His 2025 figures look for £225.8m revenue, £24.7m profit, earnings of 36.6p and a 12.4p dividend.

The 2026 year could see £250.3m revenues, £27.2m profits, 40.4p earnings and 12.8p per share in dividend.

My View

This group’s shares are ridiculously cheap, considering its unique make-up, its sales, profits and strong order book going forward.

We see its products day-in, day-out, and yet its shares are trading at bargain-basement levels, now just 178p, capitalising the whole group at only £83m.

They should be at least 50% higher, if not double within the year.