SMG Profits Hit By ITV Ad Decline
Pre-tax profits at SMG, the Glasgow-based media company, dropped by 42.5% to £11.5 million in H1, whilst earnings fell by 9.0% to £31.3 million, the group announced this morning.
The group also announced today plans to dispose of its newspaper and magazine publishing division (see SMG To Sell Publishing And Online Business). The sale should reduce the company’s debt and free it up to benefit from the proposed changes in media ownership legislation that will be brought in with the new Communications Act.
Cross media approach SMG says that it remains committed to the cross-media approach and that this is experiencing an increasing level of interest from major advertisers.
“It is also clear that cross media works most effectively where there is commonality, both of advertisers and geographic coverage. With the exception of our newspapers, all of SMG’s media assets – in television, radio, cinema and outdoor – attract predominantly national advertising as the geographic footprint of these businesses is also national, albeit in the case of television as part of the wider entity, ITV,” explains chief executive Andrew Flanagan.
Television ad revenue Airtime revenues fell by 5.0% in the first half, with a 10.0% decline in Q1, followed by a more modest decline in Q2. The 5.0% decline compares to an overall dip of 6.0% for ITV, according to SMG. Accordingly, the group slightly increased its share of net advertising revenue (NAR), with local ‘micro’-markets in Scotland remaining attractive to advertisers and therefore more resilient to the decline.
“In difficult trading conditions, the Group is performing robustly and all our businesses are profitable. We are well-prepared for the advertising upturn when it comes. The sale of our Publishing Division, will provide us with the flexibility, both financial and regulatory, to pursue our cross media strategy, building national positions in the faster growing media sectors,” says Flanagan.
Shares in SMG were up by 6p at 91p by mid-morning today.
