In the wake of declining revenue from advertising, Singapore Press Holdings Limited (SPH) will be transferring its media business to a non-profit entity.
The company said in a statement on Thursday (6 May) that the decision was made as part of its strategic review, which was announced on 30 Mar.
This restructuring exercise will entail transferring the entire media-related businesses of SPH including relevant subsidiaries, relevant employees, News Centre and Print Centre along with their respective leaseholds, as well as all related intellectual property and information technology assets to a newly incorporated wholly-owned subsidiary, SPH Media Holdings Pte Ltd.
SPH will provide the initial resources and funding by capitalising SPH Media with a cash injection of S$80 million, S$30 million worth of SPH shares and SPH REIT units, as well as SPH’s stakes in four of its digital media investments.
The transfer will take place at a nominal sum. The not-for-profit entity will be a newly formed public company limited by guarantee CLG.
SPH said that it will release more information about the CLG in due course.
Following the transfer, SPH will thus no longer be subject to shareholder and other relevant restrictions under the Newspaper and Printing Presses Act (NPPA).
Operating revenue halved in past five years, primarily due to fall in print advertising and print subscription revenue: SPH
Touching on reasons behind the restructuring exercise, SPH said that its operating revenue has halved in the past five years due largely to a decline in print advertising and print subscription revenue.
For the six months up to 28 Feb 2021, SPH’s media business had incurred a pre-tax loss of S$9.7 million, excluding the grant from the Jobs Support Scheme.
“With the decline in advertising revenue expected to continue at a similar pace to the last five years, the media business will continue to face severe financial challenges,” SPH said.
Thus, further investment will be needed to strengthen the media business’ digital content creation and product development capabilities in a highly competitive media landscape, the company stressed.
SPH said that it has undertaken strict cost management measures in recent years to mitigate the effect of the declining advertising revenue.
However, further cost cuts to reduce losses may impair the media business’ ability to maintain quality journalism.
“A not-for-profit structure will allow the media business to seek funding from a range of public and private sources with a shared interest in supporting quality journalism and credible information,” said SPH.
Under the proposed restructuring, the media business will gain the resources to focus on transformation efforts and quality journalism, as well as to invest in talent and new technology to strengthen its digital capabilities, the company said.
“This will ensure that the public will continue to benefit from quality information and credible news from trusted media titles and newsrooms, across different platforms and in vernacular languages,” said SPH.
SPH noted that it has approached the Ministry of Communications and Information (MCI) with a restructuring proposal to put the media business on a long-term sustainable financial footing.
“While such a model may be unfamiliar in Singapore, many news organisations overseas are operating under these funding structures. These include the Guardian in the United Kingdom that has been controlled by the Scott Trust since 1936 and the Tampa Bay Times in the United States that is owned by the non-profit Poynter Institute,” said the company.
SPH chairman, Dr Lee Boon Yang said, “With the resources that SPH is providing upfront and the prospects for public-private partnership funding going forward, we anticipate that SPH Media will have a more sustainable financial future.”
“It will have the resources to focus on transformation efforts and quality journalism, as well as to invest in talent and new technology to strengthen its digital capabilities. This will ensure that the public will continue to benefit from quality information and credible news from trusted media titles and newsrooms, across different platforms and in vernacular languages,” he added.
“The exercise will give SPH greater financial flexibility to tailor its capital and shareholding structure to seize strategic growth opportunities across the other businesses in order to maximise returns for shareholders,” Dr Lee concluded.