STV shares slide on Taggart doubts

SHARES in Scottish media group STV slumped 14 per cent yesterday as doubts about the future of its Taggart flagship programme overshadowed what it called a "significant improvement" in advertising revenues.

STV said in a trading update it had not yet received confirmation
from broadcaster ITV of a new commission for the longrunning detective series.

The company, formerly SMG, claimed it was confident about the future of the series "given the strong performance of the show" but admitted it would take a £3 million hit if Taggart was not commissioned in 2009
and beyond.

George Watt, the company's chief financial officer, admitted: "We are in a bit of a limbo. Discussions (with ITV] are continuing."

Watt added that STV had "prudently" rearranged its bank facilities
to cope with the possible impact of Taggart being dropped.

The move would also address lower earnings from its Pearl & Dean cinema arm in a continuing tough climate for cinema advertising.

Media analyst Steve Liechti at broker Investec said the possible loss of Taggart was a "key risk" to STV, and that even a delayed commission of the programme by ITV would also dent this year's performance.

The gritty detective series was first aired in 1983 and starred Mark McManus in the title role until his death in 1994.

Despite the uncertainty over the key show, STV had more positive
news after it confirmed that it had won its first commission from the BBC – a 20-part daytime series called Antiques Road Trip.

The group said it had also been encouraged by "significantly improved" regional advertising revenues since the first quarter of the year.

In a tough advertising climate these still shrank 12 per cent in the second trading quarter, but this was better than the 19 percent fall seen over the full six months.

STV said the national advertising market "continues to be challenging",
however, with the group's national revenues off about 19 per cent in both Q2 and the six-month period.

Watt said he believed there was no immediate prospect of the advertising climate improving. "We are troughing along the bottom. There's no huge indication at the moment of coming off that," he added.

STV has opted out of more peak time shows from the main ITV network schedule, allowing it to tailor output to Scottish audiences.

Seeking to emphasise the positive, chief executive Rob Woodward said the group had "positive momentum".

Woodward continued: "We have secured a significant new commission from the BBC and have a healthy pipeline of other key projects in development.

"On screen we continue to take greater control of our own schedule, producing more home-grown programming."

The company disclosed that its bad debt exposure from the demise of sports broadcaster Setanta – which was placed in administration on Tuesday – was £200,000.

After the early fall, shares in the company later recovered somewhat to close down 8 per cent, or 5.5p, at 61p.