SMG reports improvement in TV ad sales

LONDON - Scottish Media Group has posted double-digit growth in revenues from regional TV advertising, an area it said had 'yet to achieve its full potential'.

The company, which runs two Scottish ITV franchises, said in a trading update this morning that STV continued to outperform the rest of the network, with strong performances from both national and regional sales.

SMG said it had already made "substantial" cost reductions at the broadcaster, which is split into separate licences -- STV Central, based in Glasgow and STV North, which broadcasts from Aberdeen and was formerly known as Grampian.

At the company's annual general meeting in Glasgow this morning, SMG chairman Richard Findlay said he was confident that the company was on a sounder financial footing and a strong platform for growth.

Findlay said: "Your company occupies a unique place within the Scottish media landscape, and now has the people and the structure to punch well above its weight within its home market and further afield.

"Regional advertising, which has yet to achieve its full potential, is a major area of growth."

STV is looking to relaunch its website, stv.tv this summer, in a bid to make more money through online advertising sales and online content exploitation.

Findlay said SMG was continuing to make progress with the sale of Virgin Radio, which it now considers to be a non-core business. It said an announcement about the fate of the national pop-rock station would be made "in due course".

Radio revenues performed well in the first quarter of 2008, but looked weaker going into the second quarter, Findlay said.

The group is also "actively pursuing" a potential sale of its cinema advertising business, Pearl & Dean.

It said a weak film market had led to cinema advertising revenues in the first three months of this year falling 10% year on year, but it was confident trading would improve when a stronger summer film slate makes its way to screens in the coming months.

SMG is due to give a half-yearly update on its trading performance in August. In its 2007 full year results, SMG posted a 30% fall in like-for-like profits -- down from £15.8m to £11.1m -- with some of the strongest performances in the business coming from the "non-core assets" it is looking to sell.

The company's share price fell this morning by 4.35% to 11p by 10.30am, giving the firm a market capitalisation of just under £105m

Like many media companies, the group has suffered a sharp drop in the value of its shares in the past 12 months -- down more than 80% from 65p last summer.

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