Once a highly profitable newspaper with regional pretensions, Singapore’s Straits Times and its vernacular stablemates are being dumped as dud assets by SPH Group, a depressing indication that even with a monopoly and a captive audience, print journalism was unable to survive profitably.

The paper declares combined print and digital daily circulation of 370,700, with another 5,000 in a Myanmar edition and 2,500 in the Sultanate of Brunei.

SPH had already diversified away from newspapers into real estate, shopping malls in Singapore and Australia, aged care homes in Singapore and Japan, purpose-built student accommodation in the UK and Germany and 5G telecommunications locally.

Chairman Lee Boon Yang said shareholders have little tolerance for depressed profits and dividends. The SPH Group board unanimously agreed to bucket the media assets into a stand-alone entity which would be transferred to a non-profit, limited-by-guarantee company, for private-public funding by October. (A limited-by-guarantee company is a distinct legal entity from its owners and is responsible for its own debts)

Red ink flood

The media assets of the Singapore Press Holdings conglomerate suffered their first full-year loss of S$11.4 million (US$8.55 million) for the financial year ending August 31, 2020. The company said if not for the government’s injection of its Jobs Support Scheme for the Covid-19 crisis, the loss would have been S$39.5 million. For the six months of the current financial year to end-February 2021, pre-tax profit declined by 71 percent compared to the same period last year.

There is no gravity-defying trick for advertising-dependent traditional newspapers. Advertisers have switched budgets from high-cost, high-wastage print advertising to the affordable inventory of online sites and social media. Furthermore, they can specify the target audiences they want to reach. SPH has aggressively invested in digital start-ups and expanded digital revenues and subscriptions, but the digital contributions fall far short of the heavy declines in print.

As the diversified parent group revenues declined from 2016 – due largely to shrinking media revenues, its dividends to shareholders shriveled from 18 cents per share in 2016 to S2.5 cents in 2020. That was the last straw. The SPH board, cattle-prodded by irate shareholders, agreed on drastic surgery of the diseased media limb. To add insult to injury, SPH Group was dropped in June last year by the Stock Exchange from the top 30 listed companies (by market capitalization), that constitute its ST Index (STI).

By end-March 2021, SPH concluded a strategic review “to unlock and maximize long-term shareholder value.” The market read that as intent to excise the media drag. At its May 6 press conference, SPH confirmed bundling its media assets into a wholly-owned SPH Media Holdings entity. SPH Group felt that retaining the underperforming media assets under shareholder expectations of profits and dividends, was not sustainable.

The media entity will be fast-tracked by October into a nonprofit company, without share capital or shareholders, for public and private funding, plus extra government financial support. It will be managed more as a public good like the Arts House and the arts centers of the Esplanade, which have similar ‘limited by guarantee’ structures. The Ministry of Communications & Information has given approval in principle to the restructuring. The listed group will be free from all the previous obligations under media control legislation.

Send-off provisions

SPH Media Holdings sails off with a cash injection of S$80 million, SPH shares worth S$30 million, SPH Reit units, plus SPH stakes in four digital media investments. It will retain its staff, intellectual property, leasehold land, print assets, and information technology back-end. Chairman Lee said this would allow a three to four year “safe landing” for the stand-alone entity, provided it is prudently managed.

Lee left the options to “right-size, down-size, adjust wages, etc.” for the new entity to decide. The media operations have undergone three rounds of retrenchment over three years. Last August another 140 staff were let go. Lee emphasized that the transfer would not disadvantage or undermine the media capabilities of SPH Media Holdings. There was little room left to cut costs without adversely impacting “quality journalism.”

The chairman was cool and paternal, saying all the right things to calm anxious staff, and even more anxious Singapore citizens. Shutting down the media assets was not an option, as they were critical information providers for Singapore’s multi-ethnic society. Asked if government funding would compromise editorial independence, chairman Lee evoked the “values” of earning public trust, confidence, and respect, which would be the DNA “ported over” to the new entity, to nurture its legacy.

These pious claims would stump citizens and media observers alike. The SPH puts its journalistic capabilities to work on superb coverage of the politics of its neighbors. But it cannot serve the same critical analysis to its citizens about their own nation. Previous management had “ported over” security personnel into the newsroom to screen local copy for “unpatriotic content.”

But there was no other way for Lee to explain hacking off the loss-making media assets in order to free the listed company to grow. The group negotiated a formula with government for SPH Media to continue as a public service. Foundations and trusts owning media have proven viable in Germany, France, the UK, and USA. The commitment to independent journalism of those media brands are why they have trust, respect, and public support. That may be the challenge for SPH Media.

“Chairman is a gentleman…I am not”

International reporters asking inconvenient questions have long been swatted angrily by the late Lee Kuan Yew and his successors. It is taboo to dare to ask questions beyond the staged theatre. But a Singaporean journalist from the regional broadcaster Channel News Asia (CNA) dared to ask. Her second question was if the various initiatives undertaken by SPH Group failed, who was responsible? Both questions were addressed to the chairman.

The second question triggered apoplexy in CEO Ng Yat Chung, the retired lieutenant-general whose tenure as group president and CEO of Singapore’s Neptune Orient Lines from 2011-2017 saw the nation’s shipping icon sold to French shipping line CMA. He had announced in 2016 as CEO that “without the scale necessary to compete on costs, the best choice was to sell." In its first quarter 2017 after acquisition, CMA turned NOL into a net profit of S$26 million.

Ng turned into a fuming, pugnacious, parade-ground bully. “I take umbrage,” he shouted, berating the reporters present and the CNA reporter, in particular, pointing an accusatory finger at her. He challenged the reporters if in doing their jobs they ‘concede’ editorial to advertisers. How dare she impugn SPH titles? That was not her question. He evaded the real question that triggered his wrath.

Ng lost his cool badly in public, on live broadcast. “The chairman is a gentleman…I am not” he smirked. The irony of the nation’s premier media CEO being so inept at handling reporters was not lost on Singapore’s feisty social media commentators, who are having a field day.

Questions have been raised repeatedly about the wisdom of PM Lee, a former brigadier-general, flipping his buddies into GLCs and public-listed corporations. There are many more perched where they destroy enterprise value cluelessly. Most were brilliant academic scholars. SPH touted the “three masters’ degrees” that Ng had accumulated when they appointed him after his NOL debacle.