SPH to restructure media business into not-for-profit entity

• Singapore Press Holdings (SPH) will set up a new subsidiary to house its media business
• The subsidiary will get an injection of initial resources, funding
• It will eventually be transferred to a company limited by guarantee, to be funded by private and public sources 
• The exercise will involve transferring the entire media-related business of the conglomerate including employees 

 

SINGAPORE — Singapore Press Holdings (SPH) will be restructuring its media business into a not-for-profit entity in the midst of falling advertising revenue.  

With this move — which is expected to be fully completed by October, subject to shareholders’ approval — SPH’s media business will eventually become a company limited by a guarantee, it announced on Thursday (May 6).

A company limited by guarantee is an entity that does not have share capital or shareholders but, instead, has members who act as guarantors of the company’s liabilities. 

Organisations that run under such a model here include arts centres Esplanade and The Arts House. 

SPH said that keeping its media business as part of a publicly listed firm, subject to shareholders' expectations of profitability and regular dividends, was no longer sustainable.

Restructuring it into a company limited by guarantee will allow its media business to get funding from private and public sources, including extra financial support from the Government. 

Asked how it would preserve its editorial independence with direct government funding as a possibility, SPH chairman Lee Boon Yang said that its media business strives to serve its audiences objectively, accurately and responsibly. 

Its values of earning the public’s trust and confidence will be “ported over” to the new entity, Dr Lee said.

He gave the assurance that the team would be charged with the mission of practising responsible, objective and accurate journalism.

“This is something that the company limited by guarantee will pay great attention to,” he said. 

Following more questions about maintaining editorial independence, SPH chief executive officer Ng Yat Chung appeared to lose his cool and said that he was upset by such questions. 

Pointing with his finger to reporters present at the press conference, he said that their media outlets “receive substantial funding from various sources”, but they do not describe themselves as “bowing to the needs of advertisers in doing your job”. 

“For SPH, we have always had advertising and we have never, never conceded to the needs of advertisers… The fact that you dare to question (the editorial independence of) SPH titles… I take umbrage at that comment. I don’t believe that even where you come from, you concede. In doing your job, you do not concede to the needs of advertisers,” Mr Ng said.

“I must call this out… Chairman is a gentleman. I’m not.”

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WHAT THE MOVE ENTAILS

The exercise will involve transferring the entire media-related business of the conglomerate to a newly incorporated, wholly owned subsidiary known as SPH Media Holdings, the media company said in a statement. 

This transfer will cover its relevant subsidiaries, employees, its news and print centres, respective leaseholds, as well as related intellectual property and information technology assets.

SPH will provide the new subsidiary with initial resources and funding, with a cash injection of S$80 million, S$30 million worth of SPH shares and SPH real estate investment trust (Reit) units, as well as SPH’s stakes in four of its digital media investments. 

It is hoped that this capital injection would give the new entity about three or four years to “reach a safe landing”, Dr Lee said.

Under the restructuring proposal, the new subsidiary will then eventually be transferred for a nominal sum to a company limited by guarantee.  

After the transfer, SPH will no longer be subject to shareholder and other relevant restrictions under the Newspaper and Printing Presses Act (NPPA).

It has approached the Ministry of Communications and Information (MCI) with a restructuring proposal to put its media business on a long-term sustainable financial footing. 

SPH said that the ministry has indicated support for its proposal. MCI has also given its in-principle approval for the lifting of shareholding and other relevant restrictions under the Act from SPH upon the conclusion of the proposed restructuring.

When asked how the SPH board arrived at hiving off the media business into a separate entity, Dr Lee said that shutting it down was a “non-starter”, given its role as an important information provider in Singapore. 

A merger or sale was also not an option because competition in the news media is not intense in Singapore.

“In the interest of preserving media diversity and ensuring that our customers have access to alternative viewpoints…  this sale or merger option is not one we would like to adopt,” he said. 

“At the end of the day, the board was quite unanimous in concluding that restructuring and transferring SPH Media eventually to a company limited by guarantee is, in fact and indeed, the best and the most appropriate option for the interest of all our stakeholders.”

WHAT THIS MEANS FOR SPH MEDIA EMPLOYEES

Dr Lee was also asked whether employees in the media division would be retrenched as part of the exercise.

To this, he replied to say that the intention of the exercise was to transfer all media assets, including its newsroom employees, to the new entity. 

On whether they may face wage cuts once the not-for-profit entity is formed, Dr Lee said that he could not speak for the new company. 

“Nevertheless, I want to say that the intention in this restructuring exercise is to ensure that the media capabilities within SPH Media are in no way disadvantaged, in no way undermined by the transfer,” he said. 

“(The new entity) will then continue to nurture and strengthen this legacy, rather than undermine (it). 

“Whether it’s by cutting further, right-sizing, retrenchments or wage adjustments, they would have to be very careful in ensuring that the media capability is in no way adversely affected as a result of this transfer.”

SPH called for a halt in the trading of its shares in a filing to the Singapore Exchange on Thursday morning before markets opened. 

At the end of March, it announced that it was undergoing a  strategic review to "consider options for its various businesses" in the face of a challenging operating environment and outlook for the firm’s media business.

The media conglomerate said then that the objective of the strategic review was to "unlock and maximise long-term shareholder value”. 

SPH owns national dailies The Straits Times and Lianhe Zaobao, among other print and online publications.

It said on Thursday that its operating revenue had halved in the past five years, largely due to a decline in print advertising and print subscription revenue.

Although it has started digital transformation efforts and its digital circulation has since surpassed its print circulation, SPH said that digital subscription and digital advertising have been unable to offset the decline in print advertising and print circulation revenues.

“As a result, the losses of the media business are likely to continue and widen.”

SPH’s media business has fallen into the red, recording its first-ever loss of S$11.4 million for the financial year that ended on Aug 31 last year. 

Were it not for the Government’s Jobs Support Scheme, the loss would have been a deeper S$39.5 million, the company said. 

For the six months until Feb 28, its profit before tax tumbled 71 per cent to S$3.1 million, compared with the same period last year. If not for the Jobs Support Scheme, its media business would have incurred a loss of S$9.7 million before tax, SPH said. 

In August last year, the firm laid off 140 employees from its media sales and magazine operations as part of a restructuring exercise. It was the firm’s third round of retrenchments in three years.

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