SPH to cease listing of media businesses via restructuring

• Singapore Press Holdings Ltd (SGX: T39) called for a trading halt on Thursday (06 May 2021)
• The group announced that it will be transferring all of its media-related businesses to a newly incorporated wholly-owned subsidiary, SPH Media Holdings Pte Ltd
• SPH Media will then be transferred to a not-for-profit entity, which will be a newly formed public company limited by guarantee
• This effectively means SPH will no longer be subject to shareholder and other relevant restrictions under the Newspaper and Printing Presses Act
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SPH to transfer its media businesses to not-for-profit entity

Singapore Press Holdings (SPH) said on Thursday (06 May 2021) that it will be transferring its media business to a not-for-profit entity as part of the strategic review announced on 30 March.

SPH requested for a trading halt prior to the update. Shares, which are up 57% year to date, closed at S$1.79 on Wednesday.

The media and property group said that the exercise, which comes amidst the ongoing challenge of falling advertising revenue, will involve a transfer of its entire media-related businesses to a newly incorporated wholly-owned subsidiary, SPH Media Holdings Pte Ltd.

These include relevant subsidiaries, relevant employees, News Centre and Print Centre along with their respective leaseholds, as well as all related intellectual property and information technology assets.

SPH will provide the initial resources and funding by capitalising SPH Media with a cash injection of S$80 million, S$30 million worth of SPH shares and SPH REIT units , as well as SPH’s stakes in four of its digital media investments.

Under the restructuring proposal, SPH Media will eventually be transferred to a not-for-profit entity for a nominal sum. The not-for-profit entity will be a newly formed public company limited by guarantee (CLG). More information about the CLG will be announced in due course.

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

Dr Lee Boon Yang, Chairman of SPH, said that the exercise will give SPH ‘greater financial flexibility to tailor its capital and shareholding structure to seize strategic growth opportunities across the other businesses in order to maximise returns for shareholders’.

What is the rationale behind the restructuring?

SPH explained that its operating revenue has halved in the past five years due largely to a decline in print advertising and print subscription revenue caused by an ‘unprecedented disruption in recent years’.

The company recorded its first-ever loss of S$11.4 million for the financial year ended 31 August 2020. It said that if not for the Jobs Support Scheme (JSS), the loss would have been a deeper $39.5 million.

Over the past five years, the company has also increased spending in technology, product development and data analytics talent by 48%, to more than S$20 million a year. It has also invested S$35 million into digital content and audience development talent in the newsrooms.

Beyond manpower, SPH also ramped up spending on new consumer-facing digital platforms and products, averaging more than S$20 million a year over the past five years.

Due to these efforts, SPH’s average monthly unique audience across all SPH titles over the past two years has nearly doubled to a record 28 million, with digital circulation surpassing print circulation.

However, digital subscription and digital advertising have been unable to offset the decline in print advertising and print circulation revenues. As a result, SPH expects the losses of the media business to continue and widen.

‘Remaining part of a publicly listed company where the media business is subject to expectations from shareholders of profitability and regular dividends is no longer a sustainable business model,’ SPH says.

After approaching the Ministry of Communications and Information with a proposal, the company has come to the conclusion that a not-for-profit structure that allows SPH Media to seek funding from a range of public and private sources with a shared interest in supporting quality journalism and credible information is the most optimal solution.

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