Scottish TV Group (LON: STVG) has been hit by a downturn in advertising and the commissioning of new programming. This has led to a substantial downgrade in expectations, and the share price has slumped 20.2% to 152.5p.
Total advertising revenues are expected to be 8% lower in the third quarter and 4% lower than the year before. Total advertising revenues could be between £90m and £95m.
The programme production side of the business has suffered from delays, and this means that production volumes are lower, which hits margins as well as revenues. The main problem is in the unscripted area. The drama productions are holding up.
Cost savings are being increased from £1.7m to £2.5m and there could be news of further savings with the interims.
Full year forecasts revenues have been cut from £202m to £173m and underlying operating profit slashed from £18.5m to £11.2m. That means that 2025 pre-tax profit could be £7.8m. Profit should start to recover in 2026.
Net debt is estimated to be £30m at the end of June 2025. The dividend may be maintained at 11.3p/share, but it would be barely covered by forecast earnings in 2025. The yield would be 6%. Management may believe it is wise to cut the payout.
The prospective multiple is 14, falling to ten for 2026.