Stv Share Discussion Threads

[crawford] 05/3/2012 12:46

Wakey, wakey, 25,000 director buy.

I've topped up this morning, chart looks like rising another 20p pretty quickly from here.

[crawford] 05/3/2012 09:02

Mmmm,
things are starting to tie in here. Originally, I wasn't expecting such a large cash payment to ITV. Rob also mentioned in his interview that debt would come down quickly.
They obviously have had to announce in the past the £600k monthy payment to ITV.

The news below seems to indicate that a large amount of this payment can be made by programming rights rather than cash.

To be honest, I'm surprised we aren't up 15% on the back of this, net cash payments will be a lot lower and debt decreasing faster than I thought. Don't ask me any more about the finer details, I don't know them...yet!


STV confirms new networking arrangements
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TIDMSTVG TIDMITV

RNS Number : 6613Y

STV Group PLC

05 March 2012

STV Group plc

5 March 2012

STV, ITV and UTV agree new Channel 3 networking agreements

STV today announces it has reached a comprehensive agreement with ITV on new networking arrangements, through which STV will become an affiliate of the Channel 3 Network. The implementation of this new agreement is subject to regulatory approval and details of the new arrangements have been submitted to Ofcom. If approved, the settlement balance of GBP10.8m payable by STV to ITV PLC over 18 months will be made from programme stock and cash.

STV is confident that the new arrangements will deliver sustainable cost-sharing arrangements for the Network and enable the continued delivery of high quality commercially sustainable public service broadcast services into the next licence period.

Rob Woodward, CEO of STV said: "Today's announcement confirms the stability and certainty of long term, commercially sustainable networking arrangements between the Channel 3 licence holders. STV remains 100% committed to its public service broadcasting credentials, to delivering a distinct schedule for Scotland and to providing a platform for informed debate. We are delighted to have reached agreement on a set of terms which will benefit our viewers and consumers across all distribution platforms."

Adam Crozier, Chief Executive of ITV plc, said: "We look forward to continuing our positive relationship with STV under a new affiliate agreement. "This agreement, which is still subject to regulatory approval, represents a major milestone for us as it consolidates and simplifies the ITV Network."

Enquiries:

STV Group plc

George Watt, Chief Financial Officer

[crawford] 03/3/2012 18:44

Thank Norbert.

[norbert colon] 03/3/2012 10:06

May be of related interest.



Nobby

[crawford] 29/2/2012 12:42

Numis comment on ITV results - last sentence should benefit us:

Numis upgrades to "buy" from "add" after the "very strong" results from the home of period drama Downton Abbey.
"As has been widely trailed, advertising in Q1 has not been as bad as feared and given the upside from Euro 2012 in the second quarter we now forecast 2012 NAR (network advertising revenue) will be up 2 percent rather than flat," the broker says in a note.

[crawford] 29/2/2012 12:26

CB7,
you make a valid point. For the next 18 months, STVG paydown of debt will happen slowly but it should start dropping from here on in.

After June next year it's gone. That £600k per month will then be diverted to paying down our debt or acquisitions.
STVG should be able to cut debt by £10m a year easily from 2013, that is very significant to a company with market cap of £42m. The enterprise value should mean that STVG's market cap would be increasing by £10m a year or 25% - just on the reduction in debt.
The presentation slides shows a very aggressive plan by the company to have 67% of revenues from sources outside of it's core business by 2015 - should result in growing profits.

My point is if ITV are astute, they'll takeover STVG whilst STVG's share price is weak and ITV's is strong. A paper takeover would be very cheap for them right now, or they could use cash and shares.
Either way, with UTV and ITV both rising strongly this year and STVG still on a cheap valuation it is better for ITV to takeover STVG before it rerates.

You have to think of the takeover from ITV's point of view - they take out a competitor in many ways - STVG competing with ITV on digital viewing STV player etc but also the cost synergies to ITV - for instance on nationwide advertising which ITV does on behalf of STVG and head office staff and regional sales teams that STVG has.

ITV's results emphazise cost synergies, stripping out costs - what better way than taking over the last two remaining independents.

I personally think that ITV will want to take out STVG and UTV as they have done with Channel Television and strip out the costs and duplication. The cost savings would be vast and they would no longer have them as distractions.

In the bigger picture, ITV needs to compete with online, internet on tv and pay television - makes sense that they have the complete UK licence ownership to me.

[cb7] 29/2/2012 10:59

As ITV are getting 600k per month, they virtually "own" the company, without having to pay for it. Perhaps a move will only come when this income dries up.

[crawford] 29/2/2012 08:54

From ITV results:

"During 2011, we made progress in simplifying the network structure through the acquisition of Channel Television.


Significant progress has been made towards creating a lean, creatively dynamic and fit-for-purpose organisation. This process will be ongoing as we prepare for the next stage in the plan. We continue to look for ways in which we can improve the business and make it work more efficiently."


"Acquisitions

On 22 November 2011 the Group acquired 100% of the ordinary shares in Channel Television Holdings Limited, holder of the Channel 3 licence in the Channel Islands, as part of the simplification of the Group's network arrangements. Consideration of £1 satisfied in cash was paid along with repayment of £14 million of loans to the vendor.


In the period from acquisition to 31 December 2011 the subsidiary contributed an immaterial amount of net profit to the consolidated net profit for the year. If the acquisition had occurred on 1 January 2011, Group revenue would have been £3 million higher and there would have been a decrease of £2 million to net profit after eliminating any transactions between the Company and the Group. The subsidiary was breaking even prior to acquisition, and it is expected to contribute favourably to future simplification of the Group's cost structure. In determining these amounts, management has assumed that the fair value adjustments that arose on the date of acquisition would have been the same if the acquisition occurred on 1 January 2011.


Effect of acquisition

The acquisition had the following effect on the Group's assets and liabilities:

Goodwill has arisen on the acquisition representing the operational benefits to the Group from simplifying its network arrangements.

The Group incurred immaterial acquisition related costs relating to professional advice which have been included in administrative expenses in the Group's Consolidated Income Statement."

So they paid around £14m for Channel Television and it was loss making. We have at least £10m free cash flow (if we weren't paying off our settlement with ITV it would have reduced debt).

[crawford] 29/2/2012 08:33

Looks like we will go up today on the back of the ITV results, buyers are around.

Maybe it's clicking that we are a sitting duck.

House broker Peel Hunt target is 216p
Numis target on results was reiterated as 110p, then updated 27th Feb to 122p
Canaccord Genuity reiterated 103p.

Average broker target 147p from above.

Peel Hunt:
"With a resolution to the ITV relationship now being discussed, we believe the stock looks substantially undervalued."

[crawford] 29/2/2012 08:31

Very healthy results from ITV, they could buy us for loose change now - we are VERY VULNERABLE here!

They already own 6.79% of us.

[crawford] 28/2/2012 17:05

STV results presentation:

[davydoo] 25/2/2012 00:18

And me. I also own TNI

[crawford] 24/2/2012 19:52

phil,
a slight conflict of interest for us!

[shanklin] 24/2/2012 08:04

crawford

I agree with you post 720, just unclear why the overly positive spin in a recorded newscast, when there is enough genuine good news to keep one happy.

Hope it does well for you.

Cheers, Martin

[crawford] 23/2/2012 16:39

Peel Hunt says the stock is "substantially undervalued", their target share price remains at 216p.

[crawford] 23/2/2012 16:18

Shanklin,
we have a very strong underlying business here - significantly undervalued.

The pre-exceptional figures show how much cash this business will throw off in 18 months. I don't believe the shareprice will stay this cheap - it will rise in anticipation of this. Also, don't underestimate what Rob Woodward and the new management have done to restructuring and turning around the business.

You will notice that against a background of decreasing revenues, our margins are improving. That means they improving the efficiency of the business.
If revenues increased any it would flow straight to the bottom line.

BTW, UTV is storming ahead today, ITV is at new highs, STVG won't lag behind foreever.

[shanklin] 23/2/2012 11:56

crawford

Your post 717 details the main reason I sold

I bought a few STVG after that bullish video presentation but don't see the comments on debt reduction being reflected in today's rns, which seems far more about jam tomorrow than any time soon, especially given the increasing pension deficit

I still think its probably cheap but why oversell what may be a good hand.

[crawford] 23/2/2012 09:12

Last post for now:

This is extraordinary growth:

"digital revenues up 69%"

[crawford] 23/2/2012 09:07

100k buy.

One thing I don't quite understand.

From Rob's interview, he said he expected debt to fall quickly - I can't remember his exact words.

I don't see how debt can fall much until ITV has been repaid the remaining £10.8m
This along with pension payments means debt will remain high for another 18 months.

After that, debt could fall by £15m a year easily but for now I think they could pay no more than £5m debt back a year.

Maybe I'm wrong on that front and I'm assuming revenue remains constant.

Anyway, we are mispriced at the current level - I'd like to get back above 150p as a starter IMHO.

[crawford] 23/2/2012 08:34

They keep hinting at new initiatives, this is the bit that especially interests me:

" Launching two new market-leading consumer propositions."

[crawford] 23/2/2012 08:30

Results are as expected to me.

Dividend will be looked at again at the interim stage - I contacted the company last week and mentioned that I'd rather see debt reduce than a dividend payment at this stage so that's good with me.

The pension deficit up slightly but not as much as I feared - it should have fallen since year end with the rally.

I think these are decent results - at the current price it looks well undervalued IMHO.

Overall - company is moving in the right direction and building for the future.
We need another year or so to see debt start to reduce significantly because of the ITV repayments - I wonder if the market will anticipate this? I would expect us to be minimum over £2 in 12-18 months IMHO.

Nice to see regional advertising rising and the summer olympics should provide a nice boost.

[shanklin] 23/2/2012 08:24

They were not allowed to pay a dividend. Also their pension fund took a big hit. Mine is the 5k sell shortly after the open, albeit the core business seems to be going very well.

[philjeans] 23/2/2012 08:15

EPS 38P - HISTORIC P/E therefore 2.8 !!

Pretty bloody good I'd say.

Can't see any reference to a div though ?

[professor x] 23/2/2012 07:21

Results are not too shabby at all. What will mr market think though?