TERRY MURDEN says the big TV deal cannot leave STV on the sidelines, while the UK’s big banks will have something to say about the building society’s plans
Sky’s £1.6 billion acquisition of ITV’s terrestrial channels and streaming service ITVX is the biggest restructuring of UK television since the launch of the satellite broadcaster at the end of the 1980s. While not being directly affected by the deal, it also has implications for commercial television in Scotland.
For years there has been talk that STV, which launched as Scottish Television in August 1957, will eventually get mopped up in the consolidation of ITV more than two decades ago which saw the other franchises, such as Grampian, Granada and Tyne Tees, become part of a single nationwide broadcaster.
This latest deal has inevitably led to more speculation around STV remaining the sole survivor of that transformation by the time it marks its 70th anniversary next year.
The odds on it falling to a predator have been increasing since March when it announced a £5.9 million loss on the back of falling advertising revenue and cancelled its final dividend. It had already announced an £8m savings plan and has been given permission to reduce its operations in northeast Scotland to reflect the changing nature of news programming.
Shares in the company have never been particularly volatile, so a fall of about 10% to around 100p around the time of the results caught investors’ attention. Still trading at a similar price, the company is valued at less than £50 million, mere small change for a media giant or a private equity firm that might see more value in breaking it up.
STV Studios, which these days makes programmes for a range of broadcasters, including the BBC and the big streaming channels, is the money-making side of the business. ITV, which retain its own studios business in the Sky deal, might see some merit in bringing the two together. The two companies, after all, are long-standing partners in broadcasting and advertising.
Susannah Streeter, chief investment strategist at Wealth Club notes an important safeguard for home-produced content. “The provision that programming acquired by Sky won’t count towards ITV’s independent production quotas should offer some reassurance that the flow of original commissions to UK producers won’t simply be displaced,” she says.
“In the agreement announcement, Sky states that the deal will help to ensure continued opportunities for independent producers across the UK. So for STV Studios and its content producers that’s an important safeguard and will be reassuring.”
As for advertising, if the larger new entity keeps more eyes on screen for longer, Streeter says it could make TV advertising more attractive at a time when broadcasters are battling for marketing budgets against the streaming giants.
“That would be supportive for STV’s commercial business,” she says. Furthermore, STV’s national advertising sales are handled by ITV so it’s likely to have to renegotiate a deal with Sky/ITV for this to be ongoing, but the added scale of the operation would be advantageous to STV.
Nationwide raises its Scottish standard
Dame Debbie Crosbie’s £2.9 billion acquisition of Virgin Money saw her buying back her former employer – the erstwhile Clydesdale Bank – where she had been chief operating officer before spending three years at TSB and then taking the helm at Nationwide, Britain’s biggest building society.
In its annual results in May it said it was on track to become the largest branch network in Scotland, as the banks continue to scale back their presence.
It is no surprise that Crosbie is basing its operations in Glasgow’s Bothwell Street offices of Virgin Money where its former chief executive David Duffy based the country’s biggest challenger bank. In 2019 it leased several floors in the building to house a workforce of around 3,500. So to that degree, Nationwide’s current plans follow that template.
More noteworthy is the increasing market share the society is gaining in Scotland. It already accounts for one in five Scottish current accounts and first-time buyer mortgages and a 20% share of the personal savings market.
It’s now chasing the business banking market in which there is clearly more to be done. Business lending took a slight dip in the last financial year, falling to £14.9bn from £15.1bn, In Scotland it will come up against the big two – RBS and Bank of Scotland – who will not relinquish their crown willingly.
Terry Murden was Scotland Editor and Business Editor at The Sunday Times, Business Editor at The Scotsman, and Business and City Editor at Scotland on Sunday. He is now Editor of Daily Business
The value of STV depends on its control of terrestrial tv but what happens if in 10 years time terrestrial TV is replaced by Internet broadcasting? This of course will be a major understanding as it would require every household to have access to the Internet but apparently the decommissioning of terrestrial TV transmitters are part of the Government’s long term plans. If this happens what is STV worth ? If Scottish viewers can just as easily receive ITV via there Internet connection, would they choose STV ?