Good afternoon, ladies and gentlemen. Welcome to the STV Group plc half year results investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted anytime via the Q&A tab that's just situated on the right-hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all of the questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll, and if you could give that your kind attention, I'm sure the company would be most grateful. I'd now like to hand you over to CEO, Simon Pitts. Good afternoon, sir.
Good afternoon. Hello, everyone. It's a pleasure to be here. Over the next few minutes, I'm gonna give you some perspectives on the TV business, and in particular, why our business, STV, offers both profit and dividend growth potential. Let me first of all briefly introduce STV, because we're not necessarily a household name outside Scotland, nor indeed a global powerhouse. At least not yet, anyway. The simplest way to describe us is as the ITV of Scotland, but with go-faster stripes, I like to think. Switch to button three on your TV set in Scotland and you get STV, not ITV. Lots of familiar programming. The big soaps, Coronation Street and Emmerdale, nine o'clock dramas and Saturday night entertainment, but also with comprehensive Scottish news, current affairs and regional programming representing all parts of the country.
We are very much Scotland's commercial public service broadcaster. We also operate STV Player, a streaming service which has over three-quarters of the Scottish population signed up as a registered user and has recently launched right across the U.K. for the first time. We run Scotland's largest television production company, STV Studios, which has now grown to nine creative labels covering the full range of genres, making shows for an increasing number of broadcasters and streamers from our bases in Glasgow, in London and in Belfast. Before I go any further, why don't I show you what I mean rather than talking about it? If we could play the tape, please.
What's going on here? This is my house. The house. How did I miss that? Oh, God. We may be looking at a ritual murder. It calls for an urgent meeting of the U.K. government to deal with the spiraling cost of living crisis. Hello, and welcome to What's On Scotland. We have got a packed show full of fun for you tonight.
Fantastic. It's a date. The golf can see exactly what he is.
The big Scottish breakfast is back. There's a lot of really heavy stuff going on in the world right now. It's tough to deal with.
Oh, that was amazing.
Hello, I'm Ross Kemp, and this is The Bridge of Lies.
I think I might be a superhero.
Is that agreeable?
You are real. A dream come true.
It's not been the greatest time to be called Charlie.
So there you have it. Some fantastic programming to look forward to, culminating in a football World Cup played in the desert at Christmas. Something we've never seen before. We obviously continue to live through extraordinary times, and the seismic events of the last six months, whether that's the war in Ukraine, U.K. political turmoil, the escalating cost of living crisis, or of course, the very sad death of The Queen, have once again provided a stark reminder of the importance of public service broadcasting, of giving our viewers trusted facts, information, and insight, free at the point of use and available to all. That's exactly what our STV teams have been focused on with very strong audience results.
As a result, the H1 of this year has seen another encouraging operational and financial performance from STV building on the record year we had in 2021. Total revenues were up 3% and operating profit up 22%. Within that, all three of our priority areas recorded good revenue growth in the H1, with Studios' revenue up 16%, VOD advertising revenue on the STV Player also up 16% and Scottish advertising up 11%. Total advertising was up 4% for the H1, and we expect it to come back to slightly down for the nine months to September, as we see the anticipated effect of no football tournament this summer, as well as some caution in the advertising market, given the wider economic uncertainty we're all experiencing. The advertising market is clearly not going to be immune from any further economic pressure.
Though the recent intervention from government on energy prices was at least encouraging, and should help somewhat with consumer sentiment there. We are also expecting a stronger final quarter this year, boosted by, as I say, the first ever winter World Cup. There is no doubt also that STV's positioning as a free-to-air broadcaster and streamer is a big competitive advantage during a cost of living crisis, and our overall audience performance remains compelling. Overall, we're in a good position with a clear strategy, a strong balance sheet offering significant strategic flexibility, and we remain on track to hit our previously announced growth target out to 2023. Against that backdrop, the board has recommended an interim dividend of 3.9 pence per share, up 5% on last year, as we maintain our commitment to a progressive dividend alongside investing for future growth.
More than just the last six months, when set in the context of the last three years, ours has been a story of not just rapid recovery from COVID, but consistently strong execution against our strategy and good top and bottom line growth to well beyond pre-pandemic levels, setting strong foundations for the next phase of our plan. That plan is built on three clear strategic pillars and targets. Firstly, maximizing the unrivaled strength of our broadcast business. Secondly, driving digital growth. And thirdly, building a world-class studios business so that by the end of next year, at least 50% of our total earnings will come from outside traditional linear broadcasting, transforming STV into a much more balanced, much more diversified media business focused on digital streaming and the ownership of globally valuable programming IP. We remain firmly on track to hit those targets.
This next chart underscores the enduring strength and resilience of broadcaster content, even in a world of multiscreen viewing and peak penetration of subscription streaming services. A quiet revolution has taken place in audience measurement over the last few months. Barb, which is the industry currency for measurement, has started to record not just broadcast viewing, but viewing to the streaming platforms too, so they can be compared on a like for like basis for the first time. The results really are quite stark. The pie chart on the left shows that of all in-home viewing in the H1 of this year, that means viewing to all screens, TVs, PCs, tablets, and mobiles, 73% was to broadcast channels and broadcaster on-demand services, nearly 6x the size of viewing delivered by the global streamers like Netflix and Amazon.
Within that, STV's share of the commercial viewing audience remains extremely strong at nearly 30%, as the bar chart on the right shows. Higher than the seven next biggest commercial competitor channels put together. That scale is our USP with national and local advertisers, and you can see from the blue boxes at the bottom that we continue to dominate the commercial landscape in the H1 of the year. For example, we were the biggest peak time TV channel in Scotland for the fourth successive year, ahead of BBC One, and 99% of all large commercial audiences in Scotland in the H1, that is audiences of over 500,000 people, were on STV. That means we had 122 of the 123 highest rating shows on commercial TV in the H1 of this year.
This slide unpacks that audience gulf between the terrestrial channels and the global streamers in a little more detail. Again, based on official Barb viewing data. The table shows the top 25 shows in Scotland for the H1 of this year. 24 of them were either on BBC One, STV or Channel 4, with only one on a streaming service, the Disney film, Turning Red. If you expand that to the top 100 shows, 89 were on broadcast TV, 37 of those on STV. Only 11 were on a streaming service. Zoom out again to the top 1,000 programs for the first six months, it's a similar story. 889 of them on broadcast television. That is why we talk about the enduring strength of free-to-air TV, because the evidence of what viewers are actually watching and actually enjoying is very clear.
In the middle of a cost of living crisis, that competitive advantage of free-to-air TV is only going to get stronger in our view. You can see from the headlines about Netflix that for the first time, the subscription streaming model is starting to look vulnerable, with Kantar reporting that U.K. consumers cancel over three million SVOD subscriptions in the H1 of this year alone. Our own consumer research conducted just last month via the ScotPulse panel found that 64% of Scots either had already or will be canceling SVOD subscriptions. Turning now to the second of our three pillars, digital.
This has been another story of strong growth for us over the last four years, with STV Player streams more than trebling since 2019. Encouragingly, users of the STV Player also continue to rise, with registered users up a further 13% in the H1, active users by 7%, and STV Player VIP users by 37%. These VIPs are particularly important to us as they are opted in to our marketing and communications materials, meaning that we can fully optimize their STV Player experience, and the result is that they are our most loyal users. In half one this year, for example, an STV Player VIP user streamed 34% more content than a non-VIP.
The key to success in digital streaming here is having the best possible content proposition, obviously, and there is so much to look forward to on the STV Player for the remainder of 2022, as you saw on the tape. 10 new network dramas like The Suspect and Karen Pirie, which is on right now on Sunday nights or on the STV Player. Big new STV Player-only dramas, meaning they're exclusive to our streaming platform and won't appear on our TV channel, including the U.K. premiere of a drama called Between Two Worlds. I'm a Celebrity...Get Me Out of Here! with Ant and Dec back in Australia later next month. The big one, the Qatar World Cup launching on the 20th of November. 33 live matches on STV and STV Player featuring both England and Wales.
We're expecting at least 50% more streams than last year's Euros, and it gives us a range of incremental commercial opportunities across spot advertising, sponsorship, and VOD that we're really very excited about. For anyone concerned that the lack of Scotland at the World Cup might dampen the ratings for STV, fear not. The Scots absolutely love the beautiful game, so much so that share of male viewing for every World Cup and European Championship in recent memory has been higher in Scotland than the rest of the U.K., regardless of whether Scotland were playing. Last year's Euros final between England and Italy is a case in point because it delivered STV's biggest audience of the year in Scotland, though my guess is that most of them were probably supporting Italy.
Finally, in digital, a reminder of where we fit into the busy global streaming market because it's really very important we play to our strengths in that market and maintain a distinctive proposition given all of the competition out there. Our vision is to be Scotland's leading AVOD streaming service as well as a U.K.-wide free streaming destination, featuring thousands of hours of premium drama from Scotland, the U.K., and around the world. We bring a number of competitive advantages here, we think. Crucially, hundreds of hours of exclusive original content from the U.K. secured through the Channel three relationship with ITV that you will not see anywhere else. A trusted brand and registered user base including over 80% of Scottish adults. The ability to promote our streaming service on Scotland's largest marketing platform on our own TV channel.
Our public service status means STV Player already secures prominent positioning on most platforms, and that's soon to be guaranteed on all major platforms through the government's forthcoming Media Bill. Established partnerships with some of the world's biggest content providers for thousands of hours of third-party programming. Most importantly, as I've said, STV Player is completely free and advertising-led, which is a particularly compelling proposition in a cost of living crisis. That sets us apart also from the vast majority of streaming services, even when Netflix and Disney+ start to take advertising as they said they will. Because to my mind, that advertising-light experience that they are apparently both going to offer is potentially the worst of both worlds. You'll still have to pay a subscription as a consumer, but you'll also still get ads. It's neither one thing nor the other.
We also shouldn't forget the reason the streamers are planning to take advertising in the first place is because they think their subscription model is running out of growth. That contrasts sharply, in my view, with forecasts from the advertising-supported AVOD market, which is only at the start of its growth journey and already showing exciting growth rates as the chart on the right illustrates here. With a CAGR of nearly 40% over the last five years in the U.K. alone. Moving on to the third and final pillar of our growth strategy production company, STV Studios, where we're now making rapid progress. You see it in the number of new commissions we're winning, 25 so far this year versus 15 this time last year.
You see it in the number of returning series on our program slate, now nine, having more than doubled the number since we last set out our new studios plan. You see it in our total production hours, which will be north of 250 this year, and also in our customer base, which has expanded dramatically in the last three or four years to the point where we're now working with some of the world's biggest networks and streamers. We've also announced further material commissions even since we updated investors at our Capital Markets Day, back at the end of June.
Two more series of our quiz format, Bridge of Lies, including a new peak time celebrity version for Saturday nights, which is a big vote of confidence from the BBC and a boost for the global potential of that show. A five-series, 58-episode order of our Auction House formats from Discovery, including a brand new spin-off series based in Edinburgh, meaning that we'll be producing nearly 300 hours of auction-based programming over the next 18 months or so across seven different program titles. We've also secured a further two high-profile commissions in the reality and entertainment genres that we're yet to announce, both with format potential. We have real and continuing momentum in this market. Which means we have more shows than ever in production right now as well.
Three premium dramas for Apple, for Channel four, and for the BBC, with the Apple show in particular, an eight-part crime thriller called Criminal Record. A huge moment for us as a business due to debut next year in over 100 countries simultaneously on the Apple platform. Seven entertainment shows in production, including our big new reality show, Written in the Stars, for another of the global streamers, discovery+, and 10 different factual series as this part of our business continues to flourish. Critically, a number of these new shows have international sales potential. As a result, we are more than on track to hit the targets we set ourselves in our studios division a little over a year ago in terms of returning series, in terms of expanding our customer base and also revenue growth.
STV Studios is set to make a material contribution to our diversification strategy and targets, as you can see on this slide. In 2022, we've already secured GBP 20 million-GBP 25 million of revenue, and the fact that this is a year without a big budget drama in the numbers shows you how far we've come as a studio. With all of this year's revenue coming from entertainment and factual entertainment shows. We're also on track to deliver at least GBP 1 million of profit in STV Studios for the second year in a row. The big step up then comes in 2023, next year, when we've already secured GBP 40 million-GBP 45 million of revenue and are on track to deliver at least GBP 3 million of profit, as we previously guided.
To finish on studios, again, we are very clear on our strategic vision: to be a world-class producer for the biggest networks and streamers, and the U.K.'s number one nations and regions production company. We have a set of competitive strengths here that mean we are well-placed to succeed in our view. Firstly, our base in Scotland at a time of significantly increased production outside of London and the South East, a trend that is only going to accelerate with the government's leveling up agenda that they have recommitted to under Liz Truss. Excellent creative leadership also, and access to Scotland's biggest TV network to showcase our new formats. A growing reputation where the biggest players are now trusting us to make their flagship shows.
A low risk, flexible approach to new creative partnerships with the capacity within the group to invest more in talent going forward as the right opportunities come up. Now, much of this is about STV Studios winning market share, and that's what we've been focused on doing so far. It also does help that the wider market in content continues to grow with U.K. content spend forecast to rise steadily over the next few years, as the right-hand chart shows for the next five. Now on to the outlook for the business. We really do have a very strong content lineup for the rest of the year on TV and on our streaming service, STV Player, culminating in a month-long festival of football in Qatar.
The shape of our advertising revenues has been broadly as expected so far this year, but clearly, TV advertising isn't immune from the wider economic uncertainty we're all experiencing. As discussed, studios continue to build momentum and profitability. Last week we reconfirmed our previous guidance that we will exceed our near-term financial goals in studios. Overall, we remain on track to hit the stretching growth targets that we set right across the business for the end of 2023. Okay, we'll just finish up with the key messages there on screen for you to read. I can come back to a summary at the end if you like, but happy to break now and take any questions you might have.
Simon, that's great. Thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab that's situated on the top right-hand corner of your screen. Just while Simon takes a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your investor dashboard. Simon, as you can see, we have received a number of questions throughout today's presentation, so thank you to all of those on the call for taking the time to submit their questions.
Simon, if I could just hand back to you to run through the Q&A tab and respond to those questions where it's appropriate to do so, and then I'll pick up from you at the end. Thank you.
Of course. Thank you for the questions, everyone. Lots of good ones in there. The first one is: What does the pipeline look like for STV Studios and what capacity do you have here? Well, the exciting thing is that our pipeline looks really good, and that is precisely what we've been focused on in the last three or four years, expanding the number of shows and the number of projects that are in development. We have upwards of 200 different projects in development across all of the genres. It's not the number, actually. It's more the quality of them and the range of them across nine different creative labels. That was what we were really missing three or four years ago. We had too many eggs in the one basket, and you as investors, would never do that.
You'd never invest in just one company. We shouldn't, as a creative business, invest in one set of ideas or one creative brain. That's what's been behind our strategy to invest in our organic genre teams, but also to acquire stakes in upwards of six different other production companies and labels, whether they're minority stakes or majority stakes, in order to spread the range of ideas that we have. We have dozens of drama ideas in development that are at an advanced stage, and we know they're advanced because often they are in funded development from commissioning broadcasters, which means they like the idea so much that they're paying for the scripts to be developed. Across our five different entertainment groups, we have lots of factual entertainment, factual, and then shiny floor entertainment shows in development.
We have, as I mentioned in the presentation, another two commissioning announcements ready to go out with exciting new shows that we've won that you should watch out for, if you're following us. There's plenty more to come. We're excited about it. The capacity we have is quite scalable there, to the second point, part of your question, because although we have a fixed number, a relatively small number of full-time staff in studios, really this is a freelancer model. When we win a new show, we scale up in order to staff that show largely with freelancers, and then we scale back down when the show has been delivered.
We do have a number of permanent exec producers and development execs, but really, the cost is variable and kicks in only when we secure a commission. The next question is given the market share you have with STV, how can you further accelerate the advertising revenue given the viewing you achieve from the first-class content? Thank you for that question. Our market share is the key to the strength of our advertising performance on STV, and that is why we are the market leader in Scotland for TV advertising, but not just TV, for advertising all round. I mean, we get upwards of 50% of the market around TV advertising in Scotland.
One example of that would have been during the COVID crisis, where obviously government was spending a lot on marketing messages in order to reassure the public and inform the public around the COVID steps to take. We secured more of that spend from government than any other media owner in Scotland. In fact, twice as much as any other single media owner in Scotland. That's because TV advertising works. It's the best way of building brands. It's the most cost-effective way of building brands. What we intend to do, first of all, is use our really strong TV channel to keep the mass market advertising on our core broadcast business working well. But we are not under any illusions that linear broadcasting is in long-run decline.
More people are watching via streaming services these days on different devices. We have to be absolutely everywhere, and we shouldn't care where people are watching our content. Hence all the focus on our digital strategy. What we are doing in order to compensate and then grow our business and compensate for any declines on the broadcast side is really accelerating in digital, where we're able to achieve higher advertising yields and where we're able to tap into a fast-growing video on demand advertising market that, as I say, over the last five years has grown at a CAGR of nearly 40% and we expect to continue to grow over the next decade or so.
We're in a good position to use that, the strength of our content, the exclusivity of our content to drive strong positions in the advertising market and continue to grow, particularly our digital advertising business. The next question is, can you expand on the strategy of acquiring stakes in production companies? How does it benefit STV? Why stakes and not buy out fully? How does being a minority holder help? That's a really good question. The answer to it is that we have a range of different deals in place. They're not just minority stakes. One of our companies that we've invested in, a company called Primal Media we went straight to majority, a 52% stake, which means we consolidate their success.
The reason we did that right off the bat is that they were very, very close to being profitable, and we felt that the risk of us taking majority control was minimal, therefore. We also have other deals in place. The company that is making the Apple drama that we've commissioned, a company called Tod Productions, there isn't an acquisition or a stake at all in that business. It's a long-term profit share arrangement where we pay for the overhead of that business and the running cost of it, and we share in the revenue and profit of any commissions that they win, including a fantastic commission from Apple that will be in 100 different markets next year.
When we take a minority stake, it's generally to ensure we have a lower risk approach to acquisitions, because typically, these businesses are not yet making a profit. Our judgment is that they have a strong pipeline, strong creative leaders, and have the potential to move into profit in a medium-term timeframe. Which is why, as a component part of each of these minority investments, we have a clear path to controlling the business, first to 51%, then to 75% and beyond. That is linked to the business moving into profitability.
We pay minimal considerations up front for these minority stakes, but we secure a path to controlling the business in success that will see us pay money to the founders, often one, two, three people who have founded these businesses, but only in success rather than paying out immediately on day one and taking the risk that they don't deliver that success. The trigger for going to majority control is often that the company goes into profit over a one- or two-year period. We then pay an agreed multiple of that profit in a range that ratchets up should the profit be higher and ratchets down should the profit be lower than we'd anticipated in the plan.
That's the same for the second moment we have to go from 51% to 75%, typically in the case of the companies we've invested in. That's why we choose the strategy we do, because on day one, we don't necessarily want to consolidate a loss-making business or indeed spend too much money taking a risk on a business that may or may not work. Our judgment is that they should and that they are on the cusp of success. That is proving to be the case with the investments that we have made so far. It also is a more measured approach to M&A in our view. The next question, do we have any plans to enhance the STV Player, i.e. features and functions? Absolutely. All the time, in fact.
That is a must for any streaming service that you are constantly innovating and improving what you do. Certainly when we first set out our new plan for STV and for the growth of our streaming service, we needed to make sure that first of all, the streaming service worked on time, every time, just as normal TV works when you press the button in the corner of your front room and turn the TV on. It never fails, and nor should a streaming service. We are up to being very high quality now. We upgraded SD to HD, high definition. We are constantly on a journey of increasing personalization of the user experience. We ask our users to register with us now in order to see content.
They give us postcode, name, sex, sometimes they opt in to our marketing and communications, which allows us to optimize their experience further. By that I mean, if you are a big Emmerdale fan, for example, and you know there may well be an Emmerdale fan on the line right now, there may not be. If you're a big Emmerdale fan and you always come to our player to catch up on Emmerdale, then we should make that really easy for you. The moment you come onto our site, we should recognize you and put the latest episode of Emmerdale right up in front of you and make it easy for you to watch it. If you hate soaps, and let's face it, some people do.
If you come to our site, you should never see Emmerdale or Coronation Street or anything of that ilk. Instead, our homepage should be personalized to you, what you last watched, what we think you might like to watch, what's coming up and down the track. It works the same for personalizing the editorial experience as it does for personalizing the advertising experience. If we know a bit more about you and what you like, we're able to dynamically serve different ads in order to attract you more than a generic advertising campaign might. Yes, we are constantly enhancing the player. We've put picture-in-picture ahead of the Euros football last year. We have a number of new enhancements in the pipeline over the next few months and years to improve, in particular the personalization of it.
That is an ongoing challenge for us, to keep up with the Joneses, but also excite and interest our user base. Would you consider amending your distribution policy to a mixture of buybacks and dividends given how cheap your stock is? Well, look, I agree that our stock is cheap, and we are always considering our distribution strategy as a PLC board. You'd expect us to keep that under close review. When I joined STV in 2018, I inherited a GBP 10 million share buyback program actually, which I understood the logic of, but I cut short because I thought, we had a better use of the funds, to be honest.
Our job as a board and my job is to try and balance the various needs of our stakeholders and make sure we are still investing properly for growth alongside paying a progressive dividend. We have a GBP 30 million investment plan that we have identified to invest in digital, to invest in studios, to invest in the core broadcasting business as well, and in M&A and growth. We are on track with it. I'd never say never on share buybacks, but we'd have to convince ourselves that that was a better use of money than putting it into the growth strategy behind the business. Next question. Are all of your studios brands entirely standalone businesses, or are you able to provide common back-office functions across them to reduce costs?
Well, I've answered part of that on a previous question in that we own different levels of equity in each of these businesses. We have standalone complete ownership of our in-house creative teams of another of our labels called Barefaced TV, who are making an exciting reality show for us at the moment. They're a 100% owned label. We have a majority stake in Primal Media, and then we have a series of three minority investments in other companies. Now, of course, you will know under corporate rules that you cannot just assume a company, if it's a minority investment, should be served by the core business unless you have a larger stake in that business. But in keeping with those rules and respecting them, we do provide common back-office functions across our studios businesses.
That is often what our partner organizations and creative investments are looking for from us. They want a home, a supportive home full of people that understand their business and the whims of operating in a creative market. They want the hassle of running a TV production company taken away so that they can focus on making shows and winning and creating ideas and developing relationships with broadcasters and streamers. We often provide finance support. We provide business affairs support. We provide legal support. We co-locate a number of our labels in London or in Scotland, so provide accommodation. We provide cash flowing facilities in the event that that's required for certain shows, because some commissioners want you to pay for a show up front rather than cash flowing it themselves.
All of the benefits of being part of a larger, more liquid, parent company with a strong balance sheet and taking away the hassle of running a company separately because it is a hassle. These people, our creative partners, really wanna focus on making the shows, and we want to release them to do that and do their best work. The next question is, how are you finding recruiting and retaining talented staff into the business? Well, this is, as you would expect, the most important thing that we do, make sure we've got the right people, the right team in place. On the one hand, we have found it increasingly easy for us to recruit good talent as we've improved our business and our reputation and our performance.
Studios and our digital service are cases in point there. People wanna join companies that are doing well and that they can see doing well, and they can see other good people joining. That's a statement of the obvious. That has been the case for us in the last few years. We've recruited really strong managing directors of our studios and digital businesses. They in turn have recruited brilliant executives to work with them. We've managed to attract partnerships and M&A opportunities precisely because we've got good people working with us, and they can see that we're growing and doing the right things. On the one hand, it's been really successful and a strong story over the last few years.
I would be lying if I didn't say that it is particularly tough at the moment in this strangest of recessions, if it is that, where the labor market is incredibly hot, to retain and attract the best people into our business. Hybrid working has allowed people to work very differently, as everyone knows. You know, if you're a software engineer and a developer and you want to stay in Glasgow or Scotland, you know, STV was a very good bet for you, pre-COVID. Now that you can work for any company around the U.K. and possibly around the world from Glasgow, because of everyone embracing hybrid working, it's a bit more challenging for us. It means that we have to work harder.
We have to make sure what we're paying is competitive, which is what we've been doing and always do. It also means that we have to do an even better selling job on coming to work for a TV company, because I firmly believe that if you're working in TV, it should be because you're excited by TV and the creative industries. It's not like working in the frozen cake factory here. No offense to anyone who did work in one. I did when I was a student. Very enjoyable days. Some people, you know, are motivated and should be motivated by working in a creative environment.
We need to make that environment as compelling, as exciting, as can do as we possibly can, so that we're competing with often banks and other financial institutions that, to be honest, are not as exciting. They must be paying, and they are paying good wages. But often, young people in particular aren't just looking for money, they're looking for a different environment, an exciting, supportive, environment that gets the best out of them. We need to be brilliant at that. There are many ways to skin the cat, but it is tough right now with recruitment, it's fair to say. Next question is, can you please comment on your medium-term plan for closing off the pension deficit? Well, you're right to say medium-term plans.
We're not at the point we don't think where we can, you know, buy out that liability, and we would like to get to that point over time. It's a mature scheme. You can assume that we are doing everything we can and looking at all options around pensions, but the pension deficit is reasonably large for a company of our size. What is encouraging now is that we have a very good constructive relationship with the pension trustees. We agreed our latest valuation in record time, which kept the contributions flat on the previous two triennials. Our contributions are well within what we can afford as a company.
There's a contingent payment that is only payable in success, and that's only recently become payable because we have been successful over the last couple of years. Our job is to work hard with the pension trustees and proactively with the pension trustees to minimize the deficit through our investment strategies over time. You can see that the accounting deficit at least came down significantly due to bond yields in the last six-month period or so. There is no silver bullet, no single thing that we or companies like ours can do to solve the pension conundrum, apart from continuing to be a brilliant business that grows, so our pension becomes a smaller part of the business and the contributions become relatively smaller.
Work proactively on an investment strategy that succeeds in raising proper funds for the business. We are comfortable with the relationship and with the contributions that we make, and that we can continue to afford that while investing in the business and paying important things like a progressive dividend. The next question is: Would you consider buying other TV channels given the growing Studio's catalog? Interesting question. I think it's unlikely we would want to invest in other linear TV channels right now. I think we are more focused on digital streaming services, and growing STV Player in particular, and growing our Studios business than we are in linear TV channels per se. That isn't to say that I don't think there's a long-term future for those channels, including our channel. I really do.
I think the death of traditional TV is much overblown. As I said in the presentation earlier, 75% of all viewing inside the home, and that is not just to TV sets, but also to mobiles, tablets, to PCs in the H1 of this year was to broadcast TV channels or their related video on demand services, not to the streaming services. So there is. We are still highly relevant. But viewing is changing. People are watching differently. I think our focus should be on the areas of the business that are really growing. Our digital service, our studios business that will set us up to grow for the future.
In particular, that target that we set ourselves for the end of next year, which is that more than 50% of our earnings or our operating profit should come from outside traditional linear spot advertising for the first time by the end of next year. We are currently at 36%, having grown from around 15% when we first set out our new strategy three years ago or so. We're making really good progress. That's the point, the 50% point, I think, that many people who haven't seen us already or acknowledge this already will acknowledge that we have changed into a very different business. One that is much more focused on IP that can be sold around the world and on digital streaming than it is on traditional broadcasting.
However resilient we think that traditional market is. Okay, I think that brings to an end, the list of questions you had, and a jolly good list of questions they were too.
Simon, absolutely. Thank you very much indeed for being so generous with your time there and addressing all of those questions that came in from investors this afternoon. Of course, if there are any further questions that are submitted today, we'll make these available to you immediately after the presentation has ended, for you to review and then add any additional responses where it's appropriate to do so. Simon, I know investor feedback is particularly important to you, and I will shortly redirect those on the call to provide you with their thoughts and expectations. Perhaps before doing so, if I may, Simon, just ask you for a few closing comments to wrap up with. Thank you.
Indeed. Well, look, just to finish up with the key messages and assuming you're all still awake that is. We continue to deliver record revenue and profit growth, propelling us to levels way beyond our pre-COVID highs. We have an unrivaled position as Scotland's largest TV channel and marketing platform in what is a very fast-growing video market. Those three key strategic areas of growth that I focused on in the presentation around studios, around digital, and around regional advertising are all growing strongly and profitably, as we've shown in the H1 of this year again. That means that we are on track to hit our diversification targets and ensure that taken together, as I say, our digital and studios businesses are generating over 50% of our operating profit by 2023.
That will mean that we are becoming a much more balanced, much more diversified, more future-proofed media business. That, combined with our strong balance sheet, gives us the reassurance that we can weather any economic shocks with confidence as they periodically arise, as we did with COVID, while continuing to invest in growth and pay a progressive dividend to our shareholders. Thank you very much for listening and enjoy the rest of your day.
Simon, that's great. Thank you once again for updating investors today. Could I please ask investors not to close this session, as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can best understand your views and expectations. It's going to take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of STV Group plc, we would like to thank you for attending today's presentation. That now concludes today's session, so good afternoon to you all.