Scotland's home of news and entertainment - Strategy Update - STV Group plc
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Scotland’s home of news and
entertainment
Strategy Update
May 2018
STV in 2020
• A truly multi-platform media company with a balanced profit base across broadcast, production and
digital
o Expect around 1/3rd of profit from sources other than linear spot advertising (vs 17% today)
• A magnet for the best creative talent from Scotland and beyond
• A brand famous for a range of high quality programming and accessible by all Scots wherever they are
in the world via the STV app
• One of the UK’s leading producers, making world class returning series for a range of domestic and
international players
• Working in partnership with creative talent, advertisers, businesses and Government to drive the
Scottish economy and showcase Scotland to the world
Scotland’s home of news and entertainment
2
We have a number of strengths and areas of competitive advantage
Strong, trusted brand
Unrivalled
Talented, connection with
committed people Scottish viewers
and advertisers
Robust balance
sheet and growing Scotland’s most
returns to powerful marketing
shareholders platform
Settled A production
relationship with business well
ITV which placed for
incentivises STV Profitable, growing “nations and
to go digital digital business regions” growth
holding valuable
data
3
However, there is also significant potential for improvement
•STV not famous for enough new programming beyond news
•STV brand perceived as ageing and safe
BROADCAST •STV2 not cutting through
•News very broadcast-centric and does not embrace digital
•STV Player user experience lags competition
•Limited two-way relationship with our audience
•VOD content proposition not broad enough
•Sub-scale and no strong USP
•Needs to be more of a magnet for creative talent
•Doesn’t make the best of the STV “shop window”
•Insufficient organisational focus on growth areas
•Risk averse and lack of leadership in places
•Culture is corporate not creative
4
We have developed a clear vision for the kind of business STV needs to
become
Agile, creative,
fun place to
work
A magnet for
Giving back
creative talent
to Scotland
Connecting Making a
with audiences Scotland’s home of news range of great
and advertisers and entertainment content
Embracing the
personalised
Clear and
future of TV committed
Digital front and branding
centre
5
To implement the vision we will focus on 3 strategic objectives
1. Maximise the value of our broadcast business by delivering high quality,
cost-effective news and entertainment
2. Drive digital growth by creating an STV for everyone
3. Build a world class independent production business
6
Objective 1
Maximise the value of our broadcast business by delivering high quality,
cost-effective news and entertainment
•Create single, integrated news gathering function across broadcast & digital
Create a distinctive, cost effective,
•Invest in technology and multi-skilling to improve on-screen output
future-facing news organisation
•Deliver cost savings of £1m p.a. and a headcount reduction of 34
Invest in a wider range of new, original •Close STV2 in summer 2018, saving £1m p.a. and reducing headcount by 25
content for our main channel and STV •Invest in new original programming for STV and STV Player, focusing on formats
Player, replacing STV2 and returnable series
Make the most of our unique •Pilot new in-house formats on STV main channel
Channel 3 marketing shop window •Refocus marketing spend on STV original programming and the Player
Maximise our share of the advertising •Launch STV Growth Fund, investing £5m of airtime to support Scottish businesses
market •Improve addressable advertising capability
Work in partnership with the TV •Strategic partnership with a platform
platforms to drive more value •Launch STV Player on Sky and Virgin
7
BROADCAST
Overall, television viewing is highly resilient, with STV protected from any
market volatility by a favourable deal with ITV
Live TV TV Playback Broadcaster VOD Subscription VOD ITV/STV deal
•Programming and advertising agreements
provide significant protection to STV’s
Broadcast business
•Only 40% of any fall in national airtime or
sponsorship revenues flows through to STV
•If ITV increases programming spend, STV’s
costs only increase if our advertising and
sponsorship revenues increase
•On screen, STV has had the strongest start to the
year since 2009, with share of viewing +8% so far
in 2018
This means that STV’s Broadcast business is likely to outperform the ITV Network and that
STV is incentivised to push VOD viewing
8
BROADCAST
Our main channel consistently outperforms ITV driven by the soaps and
anything Scottish
STV peaktime share STV STV local programming
vs. ITV Share vs. Share vs.
network Network
Soaps +2 Elaine C Smith’s +7
Burdz Eye View
The Loch +6
Broadchurch +3 Thingummyjig +7
Hogmanay Ceilidh
The Voice +2
Scotland’s +3
Ross Kemp: Barlinnie +6 Scammers
Source: BARB 2007-2018, share for STV is STV/HD/+1 individuals
Billy Connolly and Me +3 People’s History +3
Scotland vs England football +34 Animal 999 0
9BROADCAST
We deliver high quality, popular news, but our STV2 news is not building
an audience
News at Six on STV: Share by region STV2 Bulletins (Average Audience)
ITV Border 40
Mon – Fri
ITV Ulster 38
STV 26 10:00 - 10:05 STV News 549
ITV North West 24
ITV Yorkshire 22 13:00 - 13:30 STV News at One (Scotland) 1,846
ITV Wales 21
UK Terrestrial Network 21 14:00 -14:05 STV News (Ayr) 2,392
ITV North East 20
16:00 - 16:05 STV News (Aberdeen) 1,881
ITV East 19
ITV South, S.East & Channel Isl. 19 17:00 - 17:05 STV News (Ayr) 1,145
ITV Midlands 18
ITV South West 17 19:00 - 19:30 STV News Tonight (Scotland) 4,121
ITV London 16
ITV West 16 21:00 - 21:05 STV News (Dundee) 6,471
Source: BARB 2017, All ITV Regions, Mon –Fri, 18:00 -18:28, Share. 22:00 - 22:30 STV News at Ten (Scotland) 3,001
Competition in news will get even tougher when the BBC Scotland
channel launches, featuring a Scottish news hour at 9pm
10BROADCAST
STV2 as a whole is struggling to cut through
STV2's regular programming in 2017
(average audience across the year)
STV’s local TV channels now 4 years old
Taggart 9,475
Peter and Roughie's Football Show 7,982 Low brand awareness and poor audiences
despite prominent EPG slot
Medics of the Glen 5,644
Edinburgh Festival Live 4,222 Onerous programming obligations
Murder at 9 4,010
Fair City 3,868 “Filling the schedule” requires focus on volume
Take The High Road 3,038 over quality
The People's History Show 2,899
Live at 5 2,601 Advertiser demand and premium remains low
The Late Show 2,581
Will be significantly impacted by launch of BBC
Scotland channel (with 15 x STV2’s budget)
Audience uplift required vs. 2017 for STV2 to break even = 5.2X
11BROADCAST
This reflects the wider market, where the big channels and the new VOD
players continue to prosper at the expense of the digital “long tail”
The PSBs still account for 70% ...while smaller digital channels are in ...and VOD viewing continues to grow.
of TV set viewing decline...
Share change
Rank Weeks 1-12 2018
(% points)
1. Drama -0.28
2. 5USA -0.23
3. Sky Sports Main -0.19
Event
4. Sky News -0.16
5. Star Plus -0.15
6. Sky Sports Cricket -0.13
7. Tru TV -0.12
8. Sky 1 -0.12 Change in “unmatched” VOD viewing on
Weeks 1-12 2018 TV set, 2014-17 (mins per day)
9. Disney Junior -0.11
10. ITVBe -0.11
Top 20 digital channels by share loss
Source: Enders Analysis: BARB/AdvantEdge 12BROADCAST
Our advertising rates tell the same story – STV main channel remains
robust but we have a strong incentive to invest in STV Player over STV2
Player
Selling to advertisers at
£4.50 CPT (average) £1.50-2.00 CPT £15-20 CPT
20 billion impressions 340 million impressions 400 million impressions
£90m revenue £1m revenue £7m revenue
We are selling STV Player impressions at 10x the value of STV2 so we could
deliver a significantly lower audience to the Player and still make more money
13BROADCAST
We will invest in a range of new, original programming for STV and
STV Player, funded by savings in news and the closure of STV2
Key Elements
• New content will be windowed across STV main channel
Strategic benefits
and STV Player, similar to BBC3 model Focuses on quality - fewer, bigger, better
• A range of entertainment, factual and reality targeting Much better use of opt out slots and spend
25-45 year olds Breaks STV out of Scotland
• Programming will be made in-house by STV Productions Develops new STV talent
and a new digital content team
Sold at the same premium as VOD
• Permanent home on STV Player
STV Productions can pilot ideas
• All episodes available immediately (boxsets)
New digital unit will focus on younger formats
• Accessible throughout the UK (and globally) and series
We will update on our new content plans later this year
14BROADCAST
Our news modernisation plan will invest in people and technology,
reinforce our on-screen advantages, and save us money overall
Scotland at heart Simplified, leaner structure
Equal emphasis on broadcast and digital
Rooted in Scotland's
communities All our journalists to be multi-skilled
Investment in technology and connectivity
Original stories across sites
More details in Committed to localness – no changes to
Ofcom licence requirements in STV North
First DMA’s attached and STV Central
report
Headcount to reduce by 34, cost savings
Truly multi-platform of £1m p.a.
the home of Scottish news
15BROADCAST
In partnership with advertisers we are also launching the STV Growth
Fund, investing £5m of airtime to support Scottish businesses
Objectives Partners Launch advertisers
Nurture the next generation of Entrepreneurial Scotland Scottish House Move
Scottish businesses
5pm.co.uk
Position STV as a long term partner Scottish Council for
Development and Industry McTear’s
Airtime offered on flexible basis: Argyle Holidays
free, match funding or rev share Advertising Association
Glasgow Private Hire
Lead generation and pipeline to
grow future advertising budgets Cooke + Indi
STV benefits include:
Strategic use of existing assets at
minimal cost to STV + many more
There will be a launch marketing campaign for the Growth Fund across TV, social and
email at the end of May. We have already secured significant incremental revenue from
new advertising partners
16BROADCAST
Our charity initiatives further underscore our commitment to Scotland
and strengthen the STV brand
£16.3m 155k • Launched October 2016
• Launched 2011
raised customers • 155K registered customers
• Raised over £16.3m
• Over 46,000 unique players every week
• Supports projects across all 32 local authorities
• 60% of sales from Direct Debit subscriptions
• Partners with some of Scotland’s biggest
• Weekly revenue now £130k
brands e.g. RBS
67,000 £2.1m • Breakeven position £170k per week, expected Q3
children to charity • 113 grants made across 28 local authority areas
supported
Sales
since launch
We are focused on accelerating the Lottery breakeven point so that STV’s £9m
investment is repaid as quickly as possible
17Objective 2
Drive digital growth by creating an “STV for everyone”
Place digital front and centre in the •Create a single digital business with its own P&L, dedicated team and KPIs
organisation •Recruit a new Digital Managing Director to drive STV Player growth
Upgrade the STV Player to deliver a •3 month intensive “bug-fix” programme across all platforms
“TV-like” experience •Launch HD version of STV Player ahead of World Cup
Move to a culture of continuous
improvement and personalisation of •Introduce new features to increase ‘dwell time’ and improve VOD vs PVR
the user experience •Use data to drive recommendations, enhanced advertising and marketing
•More boxsets
Deliver significantly improved
•Introduce STV exclusives to the Player
content proposition
•Aggregate third party content
•Target Sky, Virgin, Apple TV, X Box One
Expand distribution and access new
•Launch ad-free subscription version of STV Player
revenues
18DIGITAL
STV Player is the fastest growing PSB VOD service, and has the largest
registered user base
Stream growth 2015-17
65%
of STV’s
addressable market
are signed up as
registered users
= 2.8m people
= 39%
= 31%
19DIGITAL
We also have a simple business model, unlike ITV and C4
more usage = more inventory = more revenue
No conflict with broadcast Linear first strategy
VOD sold on its own merits Online as an add-on
Data enhancement to improve yield Creates a “ceiling” for their digital growth
20DIGITAL
However, we have some catching up to do in terms of product features
Recommendations
Autoplay next episode
Watch offline
Favourites
Personalisation
21DIGITAL
The immediate focus for STV Player is on new features, improving the
VOD content offer, and using our data to offer increased personalisation
2018 2019
HD for the World Sign-in Personalised Addressable
everywhere Recommendations Personalisation
Cup homepage advertising
Fix quality Series stacking Box sets STV originals Content Virtual
of service partnerships channels/archive
We will measure our success through simple metrics:
•Total VOD consumption
•Revenue and profit
22DIGITAL
We have agreed our first partnership deal to expand the STV Player
content offer, and we will launch an ad-free subscription version soon
Player +
•Innovative deal with award-winning pre school •Ad-free subscription version of STV Player
kids TV app
•STV content available globally for the first time
•Brings hundreds of eps of premium kids content
to STV Player •Subscription price TBC
•STV will promote the Hopster subscription service •Will look to bundle with other content and features
in return for a share of pay revenues
23DIGITAL
We have a clear sense of where STV Player’s revenue growth will come
from over the next 3 years
These priorities will determine the Player’s product and development roadmap
24Objective 3
Build a world class independent production business
Restructure, reposition and •Recruit new Managing Director
rebrand •Rebrand to shed corporate image
Focus on high value returning •All development focused on returnable series, one-offs phased out
series and the “nations and •Work in partnership with BBC, C4 and ITV to meet “nations and regions” demand
regions” growth opportunity
Use STV channels to pilot and •Create in-house “formats factory”, piloting new ideas on STV
showcase new ideas and •New digital unit to develop formats for younger audiences
formats
Expand the pipeline by placing •More umbrella deals with creative talent
more creative bets •Format acquisitions, writer deals, co-production and development partnerships
Pursue a partnership strategy to •Deeper strategic partnership with international distributor/agent
expand internationally •“IP swap” deals with US indies to co-produce in UK and internationally
25PRODUCTION
STV Productions’ 10-year performance has been inconsistent, reflecting
a weak pipeline and a lack of returning series
£m
A profit high of £1.0m in 2010 was eroded to a low of only £0.1m in 2016
26PRODUCTION
However, the pipeline is improving and STV Productions’ addressable
market is set to grow by £200m+ to £2.2bn by 2020
Forecast spend on indie content by type of broadcaster, 2016-2020
Commissioned series in 2018
The Victim (BBC)
Elizabeth is Missing (BBC)
Sex Tape (C4)
Antiques Road Trip (BBC)
Catchphrase (ITV)
Scammers (STV)
Central Station (BBC)
Market Abroad (BBC)
Super Carrier (BBC)
•Source: BBC, Channel 4, ITV, Ofcom, The Telegraph, Pact UK Television Production Census, Ovum, Oliver & Ohlbaum analysis
27PRODUCTION
Spend on Scottish productions is also set to grow significantly, driven by
increased “nations and regions” investment by BBC and C4
Increasing Scottish production
+£250million
increase in C4
regional spend over
next 5 years
“...There will be an opportunity for existing
indigenous indies to really join the big
leagues...become far more influential...and deliver
genuinely distinctive shows”
Broadcast Magazine, March 2018
28PRODUCTION
Taggart and Antiques Road Trip illustrate the value of high volume, multi-
series franchises when you get them right
Antiques Road Trip
• 110 episodes By the end of 2018
• 209 Hours
• 27 years (1983 – 2010) • 450 episodes of ART
• Sold to more than 100 territories • 150 episodes of CART (2009-2018)
• Lifetime revenue £135m • Lifetime revenue £29m
• Lifetime margin £40m • Sold to 40 territories
...and it’s still selling...£0.5m revenue in
2017
29PRODUCTION
We will expand our pipeline of ideas by investing in more creative talent,
focusing on people rather than companies
More ‘umbrella’ deals Other areas of focus
• Innovative, low risk deal Format acquisitions
already in place with the
creator of Vera and Shetland Script/writer deals
• Share of revenues
Co-production or development
Key advantages of working with STV:
partnerships
•Access to a channel for piloting
Talent deals
•Nations and regions credentials
•Flexibility Potentially taking stakes in smaller
indies/start ups
There is strong competition for talent so this will take time, but we have a
number of competitive advantages versus bigger production companies
30PRODUCTION
We are aiming to double the number of series over the next 3 years, with
a focus on higher end returning series
Today 2020 Focus
Drama 1 series 2 - 3 series •Build on The Victim
•Target long-runner
Entertainment 2 series 4 series •Widen customer base
(C4+Sky)
Factual 3 series 4 series
(with low (higher value, •High volume/value docs
value) 6-8 eps)
Daytime 1 series 2 series •Build on Antiques Road
Trip
31We are creating 3 business divisions to mirror our 3 strategic objectives,
each with its own MD, P+L and KPIs
BROADCAST DIGITAL PRODUCTION
NEWS STV PLAYER OFF-STV PRODUCTION
OFCOM ONLINE PRODUCT STV ORIGINALS
ITV RELATIONSHIP ONLINE TECH CREATIVE PARTNERSHIPS
BROADCAST OPERATIONS DIGITAL CONTENT INTERNATIONAL STRATEGY
PLATFORMS AGGREGATION STRATEGY DIGITAL PRODUCTION
STV CHILDREN’S APPEAL
2017 REVENUE: £91.8m 2017 REVENUE: £8.4m 2017 REVENUE: £10.4m
2017 PROFIT: £16.1m 2017 PROFIT: £2.9m 2017 PROFIT: £-m
32We are also putting in place a new, leaner management team focused on
delivering the strategy
CEO
CFO
New internal governance structure
MD
MD MD MD
Operating boards across Broadcast,
BROADCAST Digital and Productions
BROADCAST DIGITAL PRODUCTIONS
Chaired by CEO
HR & COMMUNICATIONS New people expected to fill 1 or 2 of
the key MD roles
SALES
LEGAL
33Our future investment in content will be paid for by cost savings and by
capping the existing share buyback
• The share buyback will be capped at £7.0m to provide funding for reorganisation costs
• The existing progressive dividend policy will be accelerated by 2 years
• 2018 full year dividend will be 20p per share
• We will also consult with shareholders on options to improve the effectiveness of the remaining capital return
34We have begun to develop a simplified set of corporate KPIs
Internal KPIs
External KPIs
Broadcast
1. Broadcast revenue
• STV reach
2. Broadcast profit • News reach
3. Digital revenue Digital
• STV Player consumption
4. Digital profit • Number of streams
5. Productions revenue • Reach
Productions
6. Productions profit • Commissioned hours
• Series
• Returning series
These KPIs are not intended to be forward-looking targets, but will be
reported against historically. We will share further detail at our Interims in
September
352018 outlook
On track for a good year
H1 2018
National airtime +2%
Regional airtime +20-25%
Digital +20-25%
Total advertising growth +6%
STV Productions 30% + revenue growth
36In summary
• Positive vision for the future to re-establish STV as a creative force
• Cash generative group with clear strategic priorities that focus the organisation on growth
• New investment in original content entirely self-funded
• Broadcast business likely to outperform ITV due to de-risked deal and cost control
• Digital growth driven by a simple business model that will reward investment in new content,
distribution and personalisation
• Productions transformed by a focus on formats, returning series and the “Nations and Regions”
opportunity
• £3m reorganisation costs covered by buyback funds, consultation with shareholders on options
to improve effectiveness of capital return
• Further enhancing the existing progressive dividend policy
37Appendix Restatement of new Broadcast and Digital divisions with existing divisions (£m) H1 16 H2 16 FY 16 H1 17 H2 17 FY 17 Revenue Broadcast 49.4 49.1 98.5 44.7 47.1 91.8 Digital 3.3 4.1 7.4 4.0 4.4 8.4 Total (Consumer) 52.7 53.2 105.9 48.7 51.5 100.2 Operating Profit Broadcast 11.2 6.4 17.6 9.3 6.8 16.1 Digital 1.1 1.2 2.3 1.2 1.7 2.9 Total (Consumer) 12.3 7.6 19.9 10.5 8.5 19.0 Productions (1.3) 1.1 (0.2) (1.3) 1.3 - ELM - - - - - - Group total 11.0 8.7 19.7 9.2 9.8 19.0 38
You can also read
