Singapore Press Holdings restructures amidst falling ad revenues

Singapore Press Holdings (SPH) announced that it will be transferring its media business to a newly incorporated not-for-profit company.

The move is part of a strategic review of its various businesses due to the ongoing challenge of falling advertising revenue in print and the further impact of the COVID-19 pandemic.

The move will involve the transfer of all media-related businesses, including News Centre and Print Centre, to the new wholly-owned subsidiary, SPH Media Holdings Pte Ltd (SPH Media). SPH’s core business is in newspaper, magazine and book publishing. One newspaper title the group publishes is The Straits Times, which has served the country since 1845.

Under the restructuring proposal, SPH will provide the initial resources and funding by capitalising SPH Media with a cash injection of SG$80 million, SG$30 million worth of SPH shares and SPH Reit units, along with SPH's stakes in four of its digital media investments.

Eventually SPH Media will be transferred to a not-for-profit for a nominal sum. This will be a public company limited by guarantee, or CLG, which is an entity that does not have share capital or shareholders. Instead it has members who act as guarantors of the company's liabilities, and will be run on a commercial basis, but all profits made will be ploughed back and reinvested into growing its media business, focusing on its mission. The CLG structure will also allow SPH Media to seek funding from public and private sources.

According to SPH, its operating revenue has halved in the past five years due largely to a decline in print advertising and print subscription revenue. For the financial year ending 31 August 2020, the group reported its first ever loss of SG$11.4 million.

By end 28 February 2021, it recorded a profit of SG$3.1 million in, down 71% year on year. It recorded a pre-tax loss of SG$9.7 million, excluding grants from the government’s Jobs Support Scheme.

The group added that post-pandemic, the decline in ad revenue is expected to continue. Over the past five years SPH increased spending on its digital products. To date, the group has managed to capture an average monthly unique audience of a nearly-doubled record of 28 million. That said, digital subscription and advertising have been unable to offset the decline in print advertising and print circulation revenues.

SPH Group also has non-media business segments. Unlike its media arms, the non-media segments has improved as the economy recovers. Overall for the financial half-year that ended 28 February 2021, the group reported an increase in operating profit of 16.6% to SG$119.8 million and a net profit increase of 26.1% to SG$97.9 million.