Market's view on Stvg
Published on April 2024
- A merger with Zinc Media Group is considered beneficial for gaining critical scale and would likely be welcomed by Zinc shareholders due to the dividend.
- STV’s pricing reflects that of an income stock, but its strategic shift towards Studios and Digital verticals positions it as a growth stock.
- Advertising revenue is reported to be up from 2023.
- There are expectations of good news in the upcoming results following a change in trend.
- There are speculations about a potential deal with ITV, although there are concerns about competition issues and Scottish politics; however, the deal could be advantageous if permissible.
- STV has increased its stake in Two Cities, a high-end production company, which aligns well with ITV’s portfolio.
- Short-term challenges for STV unless a bid comes in, with Euro 2024 and election year potentially boosting advertising revenues.
- The company is viewed as a target for mergers and acquisitions due to its low P/E and valuation.
- Concerns are raised about STV’s vulnerability to a takeover by a European or US media group, given its low market cap and minimal investor support from UK institutions.
- The triennial pension valuation at year-end could significantly impact financials due to a change in the rate environment, potentially reducing liabilities.
- A recent acquisition by STV, Greenbird Media, is viewed positively, being immediately earnings enhancing and financed from existing resources.
- There is a general lack of interest from institutions in small to mid-cap UK companies, which could lead to these companies being undervalued or targeted by private equity.