SUCCESS STORY what we said we would do, which was simplify the organisation. It was almost taking it ‘back to the future’. The strategy was to concentrate on STV’s core strength. This was in content production, broadcasting and building an online business to ‘super-serve’ Scotland. “When I joined, the company was burdened with nearly £200m of debt. It had paid a very high price for a number of diverse acquisitions that included Ginger Media, Virgin Radio, Primesight, the outdoor media, and Pearl & Dean, the film advertising business. These were a number of assets which really didn’t complement the core business based in Scotland,” he says. “My initial imperative was to ensure the survival of the company. We set up a turnaround plan with three different components. The first was to strengthen the balance sheet. And sort out the debts.” In November 2007, a £95m right issues helped reduce the debt, but the share price stood at a meagre 24p. At least this was a breathing space that helped a programme of selling off all these extravagant non-core assets. To mark the sale of these businesses SMG, resorted back to its old name Scottish Television, STV. As we went to press, the share price stands at vastly improved 102p. “We re-financed the business. We then went to our shareholders with a rights issue in order to give us some more time so we could go through a controlled sale process. We have used the proceeds from these sales to continue to drive down the debt,” he says. By 2010, Woodward and George Watt, STV’s chief financial officer, told the City that their KPIs were increasing regional advertising market share, increasing margin, making more content [it was 110 hours and the aim was for 150 hours], increase digital revenues, and page impressions on STV.tv. They even took pay cuts in line with a slim-line business. Scottish Television starts the new year with its EBITDA ratio at just over two times, which Rob Woodward says is normalised territory. However, he wants to get it down further. “Our number one objective as a board is to build shareholder value and one of the ways we need to do that in these particularly difficult economic times is to take our net debt
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down to one and half times EBITDA,” he says. Scottish Television is cash-generative, its turnover last year was £102m, and Rob is confident of hitting the EBITA target in the course of the next 12 to 18 months. marking ‘an amazing transition’. City analysts have predicted Scottish Television’s debts will be down to manageable £42m and continue to fall. Last year pre-tax profits were £14m. Digital revenues generated from video on demand; display advertising; classified advertising and transactional activities continue to grow, by up to 70% although national advertising revenues in the third quarter dipped by 3%. “Five years ago the initial deal with the banks was very difficult. There was a breakdown of trust between most stakeholders and the old
is rising again. “I’ve got an absolutely brilliant team. Businesses are formed because of the people within them. We’ve attracted great talent to the company,” he says. Battle-hardened George Watt has been with the company since 1998, joining the board in 2001 as group finance director “He is essentially my right-hand guy in the business. He is the director responsible for finance but being a relatively small company we all roll our sleeves up with different initiatives and George is no exception to that,” says Rob. The leadership team, including Watt and Woodward, drives the implementation of STV’s strategy and meet every week. “We’ve recruited some excellent strong new talent into the top team. This includes Alan Clements,
City analysts have predicted Scottish Television’s debts will be down to a manageable £42m and continue to fall SMG Group, but we’ve worked really hard to rebuild that trust and I would include the banks and our shareholders in this.” Institutional investors include UBS Global Asset Management, Henderson Global, Blackrock, Fidelity and hedge fund multimillionaire Crispin Oday. Crispin, the contrarian city financier who was once married to Rupert Murdoch’s daughter, Prudence, and now married to Nicola Pease, of the Barclay bank dynasty, and a non-executive director of Schroders, runs Odey Asset Management, which manages £3.5bn of assets. “I include all stakeholders in the business because we’ve conducted and led this turnaround in the most transparent way I know possible. I think this has helped. It has given people more confidence about who we are and what we are trying to do,” he says. By offloading the businesses, the turnover might have fallen from £120m to £102m, profitability for the slimmed-down business hasn’t been impaired, and earning per share
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who has grown the content and production business, and Steven Walker, the former commercial directory of News International in Scotland, and managing director of The Scotsman Publications, who is driving new business relationships; Peter Reilly, who joined from ITV as commercial director; Bobby Hain, director of channels which is all the business carrying the STV name, including the relationship with ITV; Suzanne Burns, director of HR and communications; Elizabeth Partyka, who has been with the business for a number of year and is controller of the schedule and online activities; Helen Arnot, who is head of legal and regulatory affairs, who has been at the sharp-end of the business over the last years; and chief technology officer Alistair Brown.” However, STV doesn’t stop with the leadership team, says the chief executive. “Through the rebirth of the company we have proven that this a company that is strong and has ambitious people who want to come and work here. Every person in the top team is >>