Scottish Media Group Plc.

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Scottish Media Group Plc.

Cowcadden
Glasgow G2 3PR
United Kingdom
Telephone: ( + 44) 141 300-3300
Fax: ( + 44) 141300–3033
Web site: http://www.scottishmedia.com

Public Company
Incorporated: 1957 as Scottish Television plc
Employees: 1,524
Sales: £207.4 million (US$344.3 million)(1998)
Stock Exchanges: London
Ticker Symbol: SSM
NAIC: 51312 Television Broadcasting; 51111 Newspaper Publishers; 51112 Periodical Publishers

Scottish Media Group plc is one of the largest cross-platform media companies serving Scotland. The company, formerly known as Scottish Television, has held the STV license, serving central Scotland and more than 3.4 million television viewers since 1957, and the license for Grampian Television, Scotland’s second largest television broadcaster, serving 1.1 million viewers across northern Scotland, since 1997. Together, these two members of the United Kingdom’s ITV (Independent Television) network produce more than 1,400 hours of programming each year. With the legislation passed in 1996 allowing cross-media ownership in the United Kingdom, Scottish Media Group has expanded beyond television broadcasting to include such market leaders in newspaper publishing as the Herald, the Evening Times, and the Sunday Herald; magazine publishing, through subsidiary Caledonian Magazines; and electronic publishing, through subsidiary Delphic Interactive. Scottish Media Group has also branched into outdoor advertising with the acquisition of Primesight in March 1999. Consistently rumored as a takeover target for the consolidating U.K. television and publishing markets, Scottish Media Group has affirmed its intention to retain its independence and its base in Scotland. Nonetheless, the company has been 20 percent owned by English independent television heavyweight Granada Group since June 1999.

Independent Pioneer in the 1950s

Until the mid-1950s, television in the United Kingdom remained under the strict control of the British Government, which served its television viewing audience through its world famous BBC stations. The introduction of an independently owned broadcast network in the 1950s, however, opened the way for a. new range of television companies. The country was divided into a number of broadcast regions, with each region representing a single license. In 1957, Roy Thomson, from Canada, was awarded the license for the central Scotland region. Thomson named James Coltart as the company’s first managing director.

Scottish Television began its first transmissions on the new ITV network that year with the popular “This Is Scotland” broadcast, featuring such local talent as Deborah Kerr, David Niven, and Moira Shearer. The company’s initial audience was limited to only 187,000 television sets. Nonetheless, its first transmissions attracted some 750,000 viewers. By the end of its first year, more than 430,000 households in the central Scotland region had television sets. The first broadcasts of the “One O’Clock Gang,” a weekday show, gave STV its first hit program and one of the longest-running of its early shows, with more than 1,760 programs lasting until 1966. That show’s success, however, paled beside the success of “Scotsport,” which debuted in September 1957 and continued to boast strong audience shares through the end of the century, making it the longest-running program in the entire U.K. television market.

After going public in 1965, STV won an increase in its programming requirements, adding some three-and-a-half hours per week. This increase prompted the company to open new studios, in Edinburgh, in 1969. The new studios, called Gateway Studios, opened just in time; that same year, a fire destroyed the company’s main studios at Cowcadden. Work on rebuilding the Cowcadden Studios began in 1972; the reopening of the new Cowcadden Studios came in 1974. STV’s studio complexes were further expanded in 1977, in order to accommodate an increase in programming. STV had meanwhile scored a coup when it handled the broadcast of the European Cup soccer finals from Hampden Park, the largest outdoor sporting event yet broadcast by a member of the ITV network.

STV remained one of the smaller of the United Kingdom’s broadcasters, focusing on its own central Scotland region. A number of the company’s programs, however, went on to reach worldwide audiences. Such was the case with the series “Taggart.” Featuring a detective in Glasgow, “Taggart” was first broadcast in 1983 as a three-part miniseries. Popular acclaim led to the creation of a series, starring Mark McManus in the title role. As audiences topped 18 million viewers for some episodes, “Taggart” became one of the United Kingdom’s longest running series, with new shows being produced for the beginning of the new century. The series even proved capable of surviving McManus’s death in 1994. Another popular and long-running series, “High Road,” debuted in the first half of the 1980s, giving STV a new programming success. In 1984, STV scored another programming triumph with the broadcast of the 24-part history of Scotland, “Scotland’s Story.”

Scottish Media Giant in the 1990s

Led by William Brown, who had joined STV in 1958 and had served as the company’s managing director since 1966, STV began to seek new blood and a new look in the 1980s. In 1985, the company hired Gus Macdonald, former journalist, and later producer with rival Granada Television, as the company’s director of programs. Macdonald was named managing director in 1990, as Brown became company chairman. One of the first moves Macdonald made was to lead a change of identity, adopting the name Scottish Television and a new logo featuring a thistle design. The new name and logo were meant to underscore the company’s commitment to its home base and to set off its identity as a Scottish broadcaster against the dominant English nature of the United Kingdom’s broadcast community.

By the 1990s, Scottish Television recognized that it would need to grow in order to maintain its independence in a media landscape promising radical changes over the coming decade. The emergence of new competitors—in the form of cable television and satellite television operators—produced new threats to the company’s position and advertising revenues. While the United Kingdom had been relatively late in adding cable and satellite television systems, these new competitors, including the BSkyB satellite network, finally began to launch in the late 1980s. At the same time, repeated calls for new legislation governing media ownership were expected to open the media market to cross-ownership possibilities in the 1990s. The new legislation promised not only the consolidation of the U.K. television market, but also the emergence of a new breed of U.K. multimedia giant.

In reaction to this trend, Scottish Television began to seek means of diversifying its own interest. An early effort, with the acquisition of Alternative International, a temporary employment agent with operations throughout the United Kingdom and in Italy, Luxembourg, Germany, and Belgium, brought the company a bit too far from its core operations, and was sold off again in 1994. Instead, Scottish Television turned to the television market itself, with its expanding number of broadcasters, for its diversification. In 1993, the company launched a new subsidiary, Scottish Television Enterprises (STE), devoted to creating programming not only for Scottish Television, but also for the entire ITV network. STE quickly found customers among the worldwide television market as well. The company also sought to enter the cable television field, buying a 20 percent interest in Good Morning Television Ltd. (GMTV); that investment, however, remained passive, and, after years of write-offs, was finally sold in 1999. Meanwhile, Scottish Television itself became attractive to other buyers: in 1994, the publishing company Mirror Group purchased a 20 percent position in Scottish Television; the following year, the cable programming company Flextech bought up another 20 percent of Scottish Television.

Scottish Television turned to satellite television, launching Sky Scottish, a joint-venture operation with BSkyB, in 1996. Meant to broadcast Scottish programming to a U.K.-wide audience, Sky Scottish’s transmissions were available to both cable and satellite television audiences. Yet the venture met with only limited success and was ended in 1998.

After Gus Macdonald had been appointed chairman in 1995, his position as managing director was filled by Andrew Flanagan, who was later named company CEO in 1997. Macdonald and Flanagan found better success with the company’s other diversification efforts. The new legislation passed in 1996 allowing cross-media ownership had opened the way to a consolidation of the U.K.’s media markets. Scottish Television took advantage of the changing media landscape by transforming itself. After starting up its Voice electronic publishing subsidiary in 1995, the company acquired Caledonian Publishing. More than a newspaper and magazine publisher, Caledonian held two key properties: the Scottish Herald and the Evening Star, two of Scotland’s most prominent and widely read newspapers. The move not only promised opportunities for cross-media advertising sales, it also enabled Scottish Television to reinforce its image as one of Scotland’s only Scotland-based and Scotland-owned media groups.

Indeed, in order to reinforce its new multifaceted organization, Scottish Television changed its name to Scottish Media Group (SMG) in 1997. The company quickly followed this change with the acquisition of Grampian Television, the ITV broadcaster holding the license for Scotland’s northern region. Adding 1.2 million viewers to SMG’s audience, Grampian also boasted the largest geographical base of all ITV broadcasters. At the same time, the company suggested that it was not opposed to a future acquisition of Border Television, the third ITV licensee in Scotland.

Company Perspectives:

We deliver a mix of information and entertainment across a range of different media. In doing so we fulfil the needs and demands of our advertisers, viewers and readers.

SMG’s reaffirmation of its Scottish roots came at the same time as support for the breakup of the United Kingdom into independent regional countries was growing. Demands for Scottish independence, with the creation of Scotland’s own parliament, led to a referendum vote in 1997. With the referendum passed, SMG found itself in a strong position to attract an audience flush with a new national pride. At the same time, other media groups, including the London-based giants, were eyeing the Scottish market, adapting their newspapers and magazines to include new region-specific editions.

Nonetheless, SMG comforted itself with its early lead and strong Scotland focus. The company also increased its interests in the burgeoning electronic media market. After forming the Delphic Interactive joint-venture between its Voice subsidiary and Delphic Media & Communications, a multimedia developer, SMG went on to acquire all of Delphic Interactive in 1999. In that same year, SMG, having strengthened its media offerings, moved to fortify its crucial advertising potential by buying up Pearl & Dean, an agency that catered to the movie theater industry, and Primesight and Baillie Advertising, both involved in outdoor advertising. At the beginning of 1999, SMG also made a move to enter one of Scotland’s most important newspaper markets, with the creation of the Sunday Herald. Judged something of a risk by analysts, as the new Herald edition proposed to go head-to-head with the dominant Scotland on Sunday and its circulation of some 125,000, the Sunday Herald underscored SMG’s commitment to becoming the dominant Scot-centric media force for the 21st century. Meanwhile, the company continued to proclaim its intention to remain an independent company, despite a change in its major shareholders. In late 1999, the Mirror Group sold its 20 percent stake to ITV competitor Granada Television, which itself had begun seeking to expand as one of the United Kingdom’s major media groups for the new century.

Principal Subsidiaries

Caledonian Magazines; Caledonian Publishing; Delphic Interactive; Grampian Television Ltd; Pearl & Dean Cinemas; Primesight pic; Scottish Media Newspapers Ltd; Scottish Television Ltd; Scottish Television Enterprises Ltd; Scottish Media Publishing Limited.

Principal Competitors

British Broadcasting Corporation Ltd. (BBC); Johnston Press; BSkyB; Newsquest plc; Carlton Communications pic; Trinity Mirror; Hollinger International Inc.; United News & Media pic; Independent News.

Key Dates:

1957:: Roy Thomson is awarded ITV license for central Scotland, and Scottish Television programming begins.
1966:: Company gains listing on London Stock Exchange.
1969:: Gateway Studios opens in Edinburgh.
1974:: Cowcadden Studios is inaugurated.
1983:: “Taggart” television series debuts.
1993:: Scottish Television Enterprises is formed.
1996:: Sky Scottish joint venture with BskyB is launched; company acquires Caledonian Publishing.
1997:: Name is changed to Scottish Media Group; company purchases Grampian Television, ITV broadcaster for northern Scotland.