The Singapore Press Holdings’ (SPH) share prices dipped 15 per cent to S$1.52 after the market opened on Friday (7 May), indicating a sign of low confidence by the shareholders in SPH’s move to restructure itself and transfer its media business to a not-for-profit entity.
The company had earlier announced that it will restructure itself and transfer its media business, SPH Media, to a Company Limited by Guarantee (CLG) in the wake of declining revenue from advertising.
SPH 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.
Following the transfer, SPH will thus no longer be subject to shareholder and other relevant restrictions under the Newspaper and Printing Presses Act (NPPA).
SPH chairman convinces how the restructuring move can help to maximise shareholders’ returns
Speaking on the matter, SPH chairman Lee Boon Yang explained on Thursday that the proposed restructuring would give the company greater financial flexibility to maximise returns for shareholders.
“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,” he noted.
Dr Lee believes that the company would then 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.
Dr Lee concluded: “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.”
SPH’s share prices fall, indicating shareholders’ low confidence in SPH’s restructuring plans
However, the market does not seem to agree with the SPH leadership and the MCI’s opinions, as the company’s share prices dropped considerably after the market resumed on Friday morning.
SPH’s share prices dipped 14 per cent to S$1.52 as of Friday at 12pm, a sharp fall from the previous closing at S$1.79 on Wednesday. While it rose to $1.61 at one point after a short rally, the price fell steady down to S$1.52, the lowest since April this year.
The company called a trading halt on Thursday, during which it announced the proposal to restructure and transfer its media business to CLG.
SPH CEO bristles at questions on SPH publications maintaining editorial independence
During the press briefing yesterday, SPH CEO Ng Yat Chung was asked by reporters if the plans would mean the media business would pivot to emphasize editorial integrity ahead of advertiser interests.
While pointing at the reporters, Mr Ng replied that the media outlets under SPH do not describe themselves as “bowing to the needs of advertisers in doing your job” despite where they receive their funding from.
“If I may just interject, I honestly I take umbrage at your first question. There are reporters from here who received substantial funding from various sources, and I don’t believe that you will describe yourself as bowing to the needs of advertisers in doing your job,” he remarked.
Mr Ng stressed that SPH publications have always had advertisers and that the company has “never conceded” to their needs.
“We will always continue to provide fair, reliable, credible reporting.” he added. “The fact that you dare to question SPH titles for, in your words, conceding to advertisers – I take umbrage at your comment.”
“I must call this out. (SPH) Chairman (Lee Boon Yang) is a gentleman. I am not,” said Mr Ng.
Raising his voice in concluding his answer, Mr Ng stated, “The purpose of doing this is to make sure that SPH media will continue to do the job we have done so well for so long.”
MCI declares support to SPH’s proposal for restructuring, prepared to provide funding
The Ministry of Communications and Information (MCI) had also stepped in to declare the Government’s support in SPH’s plan to restructure media business, adding that it is prepared to provide funding support to help it “build capabilities for the future”.
“It is in the interest of Singapore and Singaporeans that our local media continues to thrive and deliver quality journalism,” MCI said in a statement on Thursday.
“After SPH Media is transferred to a CLG, MCI is prepared to provide it with funding support to help it build capabilities for the future.”
Minister for Communications and Information S. Iswaran said that having a “professional, capable and respected local news media” is critical to Singapore’s national interest.
“They report through a Singaporean lens, so that our citizens have a good understanding of the opportunities and challenges facing our country, the choices we need to make, and our place in the world. The Government therefore supports high quality, credible journalism in our local news media,” he remarked.
“We are supportive of SPH’s proposal to restructure and transfer SPH Media to the CLG. Our goal is to help the local news media and our journalists adapt and thrive in the digital era while maintaining the high professional standards we expect and value.”