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

By TESSA OH, JANICE LIM

MAY 06, 2021

• The Singapore Press Holdings (SPH) will set up a new subsidiary to house its media business, with injection of initial resources, funding
• The subsidiary 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 and its news and print centres

SINGAPORE — The Singapore Press Holdings (SPH) will be restructuring its media business into a not-for-profit entity amid 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 the Esplanade and The Arts House.

The restructuring into a company limited by guarantee will allow SPH’s media business to get funding from private and public sources, including getting extra financial support from the Government.

Asked how it would preserve its editorial independence, 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 he took umbrage at such questions.

Pointing 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 don't believe even where you come from, you concede in doing your job,” Mr Ng said.

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

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 Reit (real estate investment trust) units, as well as SPH’s stakes in four of its digital media investments.

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

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 is to "unlock and maximise long-term shareholder value”.

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

Revenue for its media business has been on the decline, led by falling advertising revenue and loss of revenue from its convenience stall chain Buzz, which it sold in July last year.

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 since 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.

In August last year, SPH 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.