The turnaround of STV underlines Scotland’s resurgent creative sector
Rob Woodward recalls it as a “near death experience”. At the beginning of 2007 he had been appointed chief executive of SMG, the then owners of STV, Virgin Radio and assorted media businesses.
The company was floundering under what was described at the time as “a weak strategy, weakly executed – leading to excess debt, a lack of focus, instability in the leadership, dissatisfaction amongst the shareholders and poor staff morale”.
For years it had been on a spending spree, paying top dollar for high profile companies whose growth potential was badly misjudged. It had already been forced to sell its newspaper division, including The Herald, Sunday Herald and Evening Times.
Traditional business models were crumbling as the internet captured the attention of advertisers and analogue pounds were replaced by digital pennies. Its chief executive had resigned the previous summer, followed in the New Year by its chairman and non-executive directors.
A new team was swiftly in place, but “we were going out of business,” says Woodward, “we were just a few months from administration.” SMG managed to negotiate breathing space from the banks and, over the next three years, began a turnaround that included selling off billboard firm Primesight, iconic cinema advertiser Pearl & Dean and Virgin Radio (the latter for a quarter of its original £225m purchase price).
The aim was to bring the company back to its core: television. But at the same time, it was operating in the middle of opposing forces; deep recession and the need to invest in digital.
Woodward relied on a series of business principles; articulate a vision, build strong teams, trust your instinct, instil confidence, set ambitious goals, communicate relentlessly, be accessible (at STV, there are no offices and Woodward sits in the middle surrounded by its staff) and inspire others to over-achieve. And “one of the most difficult”; know when to acknowledge something’s not working.
Today, he says, “we have a company that is widely acknowledged as being at the forefront, particularly in digital media. It’s been an exciting and challenging journey but we have an organisation that is absolutely aligned and determined to continue commanding leading positions in the markets we serve.”
It wasn’t always plain sailing; staff took pay cuts and, in a bid to assert control over its schedule and champion Scottish content, STV became embroiled in a dispute with the network, ITV, over which programmes should be aired in Scotland. The pair were headed for court, each claiming £35m in damages.
Fearing a punitive loss and a punishing sell-off by shareholders, STV reached an agreement with ITV. After a series of contra-deals, the net financial loss to STV was put at £4.8m; investors were relieved and its share price soared.
But the saga did have the effect of signalling the company’s determination to lead from the front and champion Scottish content. Last month, STV said it had reached a “comprehensive” networking agreement with ITV. “We’re the best of friends,” says Woodward.
It also did not stop STV establishing itself during that period as a leading producer; perhaps one of the most striking examples is the fact that the BBC is now its largest client (STV has just agreed a deal to deliver 120 hours of the hit series Antiques Road Trip over the next two years). Other partnerships include a joint venture with a US company to exchange programme format ideas.
In February, the company announced its latest set of results – which included increases in profits, margins, digital revenues and earnings per share – and set itself new voluntary key performance indicators.
“STV has an ambitious plan for growth and our strategy remains clear going forward, with investment in strategic partnerships, helping extend the STV brand in our core Scottish market and beyond,” Woodward told analysts.
“We remain committed to growing a strong, successful and dynamic STV, cementing our position as Scotland’s most popular peak time TV station and leading commercial media website, and as the provider of unique digital content across multi-platforms.”
The turnaround has engendered a new vibrancy within STV and provided a boost to the media industry in Glasgow. A revamp of its schedule and output has been felt across the country; Woodward says that it has the most localised news service in the UK, with programmes in Glasgow, Edinburgh and Aberdeen and an opt-out bulletin for Dundee.
It launched Scotland Tonight, which quickly overtook the BBC’s Newsnight Scotland in viewing figures, as part of its response to the constitutional debate in the run-up to the referendum (despite hailing the show’s success, Woodward mentions a few times STV’s complementary relationship with the BBC).
And its websites – including more than 20 recently launched ‘STV Local’ micro-sites – are now visited by three million people each month.
“Five years ago, we didn’t really have a digital business,” says Woodward. “Now we have a mantra – whenever, wherever; meaning our consumers are able connect to and consume our content at any time across all mobile platforms and home entertainment devices.
“The thing that has surprised many is that television has proved to be a lot more durable then people thought. Five years ago, they were saying television will ‘disappear’ onto the internet; people would desert the terrestrial channels and only consume short-form content delivered by the likes of YouTube.
“Actually, that hasn’t happened. Last year, for the first time in 20 years, our share of viewing increased. We have weathered the digital revolution and see it as an opportunity; in fact, I’d say that the world of the internet is coming to the world of the television, not the other way round.”
Looking forward, Woodward points out that media devices will continue to evolve – from HD to 3D, even 4D (adding physical sensation to the viewing experience), that a battle will be fought – between ‘smart’, web-enabled, TVs and ‘set-top’ boxes – over which provides access to content, and that delivery by broadcast and broadband will become seamless. Ultimately, all things that we use will be connected; the socalled ‘internet of everything’.
“We’re ‘platform agnostic’,” says Woodward, “we don’t mind; the important thing is that our content is available free of charge across as many platforms as possible. Social media and the use of ‘second screens’ by consumers will make interaction with our content increasingly creative.”
Creativity, content and connectivity – Woodward’s “three Cs” are at the company’s heart, he says. “Our schedule is distinctive, our consumers have got used to the combination of the best of the network and our local content, our digital services are developing rapidly, news and current affairs are going from strength to strength. I do believe we have put STV back at the forefront of serving Scotland.”