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10 Facts About the Major Restructure of SPH Whereby Its Media Business Will Become a Not-for-Profit Entity

2021-05-06 , 3:05 pm

In the past, the first thing my father would do every morning, after scratching his rump, is read the newspaper while having a coffee.

He still has his daily coffee every morning, but he now stares at his phone instead, scrolling up periodically with his index finger.

The latest newspapers are nowhere to be seen in the house, and the ones that remain from eons ago are used to wrap fragile gifts.

My father’s recent preference for digital media is illustrative of the decline of print media in recent years.

With thousands of articles on the same topic available at a few taps of one’s thumbs, it’s no wonder that many people, even older folks, have turned to their electronic devices for news.

That’s why not many were surprised when Singapore Press Holdings (SPH) announced today (6 May) that it will be restructuring its media business into one that supports “quality journalism”.

So, what does this mean for the media companies under SPH and why exactly did it happen?

Here are 10 facts about the major restructuring exercise that SPH will undergo:

All Media-related Businesses From SPH Will Be Transferred to SPH Media, a New Entity

The restructuring exercise involves transferring the entire media-related business of SPH to a newly incorporated wholly-owned subsidiary, SPH Media Holdings Pte Ltd (SPH Media).

This includes all its magazines, books, and newspapers, including The Straits Times.

Its relevant subsidiaries, all related intellectual property, and information technology assets will also be moved to the new entity.

The Newly Formed Company Will be a Non-Profit Entity

Under the major restructuring, SPH Media will eventually be transferred to a newly-formed public company for a nominal sum.

This firm will be a company limited by guarantee (CLG), which is usually set up by non-profit organisations, like companies promoting the arts.

Local organisations with a similar operational model include the Esplanade and The Arts House.

Under this structure, the company will have members instead of shareholders. These members agree to pay a fixed sum in case the company is wound up.

SPH Will Provide the Initial Funding

Starting from scratch won’t be easy, of course, which is why SPH will be doling out a little financial help at the beginning.

SPH will provide the initial funding and resources needed to run SPH Media.

This includes a cash injection of S$80 million, S$30 million of SPH shares, SPH REIT units, and SPH’s stakes in four of its digital media investments.

It Will No Longer be Subject to the Newspaper and Printing Presses Act

Since it will become a CLG, the new company will not be subject to shareholder and other relevant restrictions under the Newspaper and Printing Presses Act.

Introduced in 1974, the act was amended in 1986 to control the sale and import of foreign publications that supposedly failed to report fairly and objectively on Singapore.

It’s Expected to Be Completed By October

The move is expected to be completed by October, as long as shareholders approve of it.

According to ST, circulars of the new model for SPH’s media businesses will be sent out in the next few months.

An extraordinary general meeting (EGM) will then be called between July and August for shareholder approval.

Once that’s done, SPH Media will be transferred to the newly-formed CLG.

Decline in Print Media to Blame

As for why the company chose to undergo its biggest restructuring exercise since 1984, it said the media industry has faced “unprecedented disruption” in recent years.

This can largely be attributed to the shift in consumer preference from print to digital media.

Through its efforts, SPH managed to nearly double its digital readers, with its digital circulation surpassing its print circulation.

But digital subscription and digital advertising have not been enough to offset the decline in print advertising and print circulation revenues.

In fact…

SPH Recorded Its First-Ever Loss in 2020

Last year, when businesses around the world were trying their best not to collapse under the weight of the COVID-19 pandemic, SPH recorded its first-ever loss of S$11.4 million for the financial year that ended 31 Aug, 2020.

And if not for the Jobs Support Scheme, the loss would have been a deeper S$39.5 million, SPH said.

The company has implemented strict cost-cutting measures to mitigate its losses, but introducing any more such measures will “impair its ability to maintain quality journalism.”

“Remaining part of a publicly listed company where it is subject to expectations from shareholders of profitability and regular dividends is no longer a sustainable business model”, it added.

SPH Media Will Seek Funding From Public & Private Sources

That’s why SPH described the restructuring as the “optimal solution.”

As a non-profit entity, SPH Media will be allowed to seek funding from a range of public and private sources “with a shared interest in supporting quality journalism and credible information.”

This includes getting extra financial support from the Government.

Employees Will Not Lose Their Jobs

Last Aug, SPH laid off 140 employees from its media sales and magazine operations as part of a restructuring exercise.

Fortunately, it seems like no employees in SPH’s media businesses will lose their jobs this time.

According to reports, its employees in the media division will also be moved to SPH Media, and later to the CLG.

Winding Up or Selling Off Were Not “Feasible Options”

Even though it has suffered massive losses recently, winding up or selling off was never an option for SPH.

This is because its media businesses play a key role in providing quality news and information to the public, particularly in the vernacular languages, SPH said.

“We cannot allow a functioning, trusted and respected media organisation to be whittled down over time by market pressure and commercial constraints,” SPH chairman Lee Boon Yang said.

“In the context of Singapore’s multiracial society, SPH serves a crucial function by providing news and information in vernacular languages to serve Singapore’s diverse ethnic communities.”

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