Govt supports SPH plan to hive off media business
Transfer will enable media business to focus on quality journalism, says SPH chairman
Singapore Press Holdings (SPH), which publishes The Straits Times, has received the support of the Government for its plan to hive off its media business into a new company limited by guarantee (CLG), as part of SPH's ongoing strategic review.
Announcing the move yesterday, SPH chairman Lee Boon Yang said the transfer will enable the media business to focus on quality journalism and invest in talent and new technology to strengthen its digital capabilities.
Signalling its support in a statement yesterday, the Ministry of Communications and Information (MCI) said the Government is prepared to provide funding support to the CLG, to help it accelerate its digital transformation and build capabilities for the future.
It has also given its in-principle approval for the shareholding and other relevant restrictions under the Newspaper and Printing Presses Act to be lifted from SPH, upon the closing of the proposed restructuring.
Minister for Communications and Information S. Iswaran will deliver a ministerial statement on the subject when Parliament sits on Monday.
Under the plan, all of SPH's media-related businesses will first be transferred to a wholly owned subsidiary, SPH Media Holdings.
SPH will provide the initial resources and funding by capitalising SPH Media with a cash injection of $80 million along with $30 million worth of SPH shares and SPH Reit units, and SPH's stakes in four of its digital media investments.
SPH Media will later be transferred for a nominal sum to a newly formed public company limited by guarantee, or CLG - an entity that does not have share capital or shareholders but instead has members who act as guarantors of the company's liabilities.
The CLG 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.
The transfer of the media assets to the CLG is subject to SPH shareholders' approval at an extraordinary general meeting, which would be called in early July. Upon shareholders' approval, the restructuring is set to be completed by October.
Explaining the rationale for the move, SPH said in a statement that the media industry has faced "unprecedented disruption" in recent years, with SPH's operating revenue halving in the past five years, largely from a decline in print advertising and print subscription revenue.
SPH's media business recorded its first loss of $11.4 million for the financial year that ended Aug 31 last year.
"If not for the Jobs Support Scheme, the loss would have been a deeper $39.5 million," it said.
The losses of the media business are likely to continue and widen. Dr Lee said the fundamental issue that needs to be addressed is the long-term viability of SPH Media in its present structure, subjected to market pressures.
"SPH shareholders are not likely to tolerate the continued negative impact that the media business has on the company's financial prospects.
"On the other hand, we cannot allow a functioning, trusted and respected media organisation to be whittled down over time by market pressure and commercial constraints.
"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."
No more scope for cuts without hurting quality of journalism: SPH CEO
There is no further scope for cost cuts without impairing the quality of journalism that SPH Media provides, said Singapore Press Holdings (SPH) chief executive Ng Yat Chung yesterday.
Responding to questions on whether SPH media staff could face salary and bonus cuts now that they will come under a not-for-profit entity, Mr Ng said the restructuring exercise "is to make sure we can preserve the fine bowl of china".
"The intention is not to do anything that will impair the ability of SPH Media to continue to provide quality journalism."
He was referring to what founding prime minister Lee Kuan Yew had said to the late president S R Nathan, when Mr Nathan was appointed executive chairman of Straits Times Press a few years before SPH was formed in 1984.
Mr Lee had said: "Nathan, I am giving you The Straits Times. It has 150 years of history. It has been a good paper. It is like a bowl of china.
"If you break it, I can piece it together. But it will never be the same. Try not to destroy it."
Under the restructuring proposal, SPH Media containing the media business of SPH - including The Straits Times and Lianhe Zaobao - will be transferred to a not-for-profit entity. This will be a newly formed public company limited by guarantee, or CLG.
SPH chairman Lee Boon Yang said he could not speak for the CLG, as the intention is for it to operate independently.
But he gave the assurance that the media capability in SPH Media will not be disadvantaged or undermined by the transfer.
"The CLG is fully aware of this intention and fully cognisant of the fact that they have now taken on the responsibility of caring for this china bowl.
"They will then continue to nurture and strengthen this previous legacy, rather than undermine it - whether by further right-sizing or wage adjustments," he said.
"They would have to be very careful in ensuring that media capabilities are in no way adversely affected as a result of this transfer." - THE STRAITS TIMES