THE CHIEF executive of Scotland's largest commercial broadcaster, SMG, has refused to rule out further job losses, after the company revealed it had shed almost a quarter of its staff in just over a year.

Rob Woodward was in buoyant mood last week as he revealed to the City interim results showing a £1 million rise, up 26%, in operating profit to £4.9m in the six months to June 30.

Woodward said the results showed SMG, which plans to re-brand as STV group plc to reflect its renewed focus on its TV business after the disposal of Virgin Radio earlier this year, was on target to take a 21% share of the Scottish TV advertising market by the end of 2008. Woodward said the business was now "operationally lean, commercially focused and creatively successful".

However, critics of the company argue the rise in profits are due to vigorous cost-cutting, with staff numbers dropping from around 500 to 400 since March 2007, rather than a reflection of greater creativity and production of television programmes at the Glasgow-based business.

The interim results revealed Woodward had reduced "controllable costs" by £5m, or 20%, since beginning to restructure in March 2007; the overview statement went on to state there had been a reduction of "net headcount by 23%" and the business was planning a "further £1.5m of annualised cost reduction to year end".

Although Woodward strenuously denied further savings would be made through further job losses, a former member of staff, who did not wish to be named, said: "All they've got is the staff and the building. OK, they can rent out one floor but after that all they've got to cut is staff. There will be other people going, that's for sure."

A broadcasting expert estimated a saving of £1.5m equated to around 30 jobs.

Woodward told the Sunday Herald that further job cuts were not planned but added: "We never rule anything out."

He said: "When we restructured the business there were areas, such as solutions a catch-all term for disparate parts of the broadcasting operation, which were people and capital-intensive and we have cut back there. They were loss-making legacy areas of the business and were not part of where we saw the future. Now, we feel we have the appropriate headcount."

Woodward said SMG had invested heavily in recruiting staff for the digital team, as it aims to push forward its ventures business, largely through its web offering, which launched last week. He said he didn't want to focus on staff losses - declining to say exactly how many staff had been let go but estimating it was around 100 - and added: "We wanted to get new skills into business, for example we have hired more people in news."

The SMG boss said he preferred to focus on SMG's creativity, announcing plans for a new breaking news service on the company's new website. He also stressed the business's success in the regional advertising market - up 14% on the first six months of last year - and said his sales team was continuing to innovate.

He said SMG was currently in negotiations with several organisations about sponsoring the broadcaster's sporting news. However, that decision is likely to alarm the non-commercial BBC which shares footage with STV for the programme.

In addition, the company is petitioning the government in both Westminster and Holyrood for extra funding to support its news output. Referencing the new Gaelic channel BBC Alba, which launches next month, Woodward said: "There is already a precedent of direct government funding going to broadcasters."

Richard Menzies-Gow, analyst at DKW, said working out if there were further job losses on the way was a "tricky one as it's difficult to say how much fat there was in there".

He said the shedding of around a quarter of staff was "unusually high" but argued it could be explained by the "excess staff that had built up through the years, people working in different parts of the business". In the past five years, SMG has held, or holds, interests in print, television, radio, outdoor and cinema advertising.

Menzies-Gow said, considering the current advertising climate, it would be difficult to find a media company that wasn't at least considering cutting back. "The bottom line is the profit margin on the TV business is less than 10%. Its revenue is not high enough to justify its cost base."