It was reported on Sunday (18 Mar) that the advertisement page count of Singapore Press Holdings’ (SPH) Straits Times had slipped 12.7% year-on-year for 2Q in its financial year of 2018 (FY18). SPH's financial year ends on 31 Aug.
According to a report from UOB Kay Hian, the decline was driven primarily by the display ad segment, which accounted for two-thirds of the total decline on an absolute basis. The decline of ST advertisement page count was 13.6% year-on-year for 1Q.
"A decline of this magnitude historically translated to 16-22% y-o-y decline in quarterly print revenue," UOB Kay Hian said. "With no fundamental improvements, a re-rating like its US-listed peers is unlikely."
UOB Kay Hian continues to recommend investors not to hold SPH shares and to sell them. "SPH remains structurally challenged with no floor to be found yet for its media business," it added.
It has been observed that US newspapers like New York Times (NYT) has been driven by a fundamental recovery in both circulation and advertising revenue. Since Q1 2017, NYT has seen an average quarterly growth of 57% in digital subscriptions, which has resulted in overall circulation revenue rising 11-19%. This in turn, has arrested the 1-9% decline in advertising revenue, driving an overall revenue growth in NYT.
"The same cannot be said for SPH which continues to see flat circulation revenue in spite of increased digital subscribers amid a backdrop of a continued decline in advertising revenue,” a spokesperson of UOB Kay Hian commented.
Former Chief of Defence Force LG Ng Yat Chung takes over SPH
Lieutenant-General (NS) Ng Yat Chung became the Chief Executive Officer of SPH last year on 1 Sep 2017, after he left NOL.
On 9 June 2016, it was announced that Temasek will tender its NOL shares to the French Group CMA CGM. LG Ng, as the then-CEO of NOL, said that "without the scale necessary to compete on costs, the best choice was to sell".
He defended his performance at NOL as "NOL's past successes were built on its business model as a premium service line... This was always the way for NOL, even before the 2008 financial crash, and it did well". He then acknowledged that the company had been "a bit slow and reluctant to change".
But in May last year, Reuters reported that CMA CGM managed to turn NOL around, with NOL posting a $26 million net profit for Q1 2017, a feat that LG Ng was not able to achieve.
Following the sale of NOL to CMA CGM, LG Ng eventually relinquished his role as CEO of NOL and on 20 July 2016, he was appointed as a board member of SPH, before becoming its official CEO last year.
It remains to be seen if LG Ng can turn around SPH, when he failed at NOL.