SPH restructuring a matter of national interest: Iswaran

Local news media are not simply economic entities but trusted institutions that reflect Singapore values. The Government will support the media business as it adapts to a digital future, says Communications and Information Minister S. Iswaran. The following text is adapted from his statement to Parliament yesterday.

A high-quality, professional and respected media, reporting news by Singaporeans for Singaporeans, is essential to the fabric of our nation, says Minister for Communications and Information S. Iswaran. ST PHOTO: GAVIN FOO

Mr Speaker Sir, last Thursday, Singapore Press Holdings Limited (SPH) announced its proposal to restructure and transfer its media business to a company limited by guarantee (CLG) to secure its long-term viability. My ministry has voiced the Government's support for SPH's proposal and committed to support the media business as it builds capabilities and adapts for a digital future.

Role and value of local media

A high-quality, professional and respected media, reporting news by Singaporeans for Singaporeans, is essential to the fabric of our nation. Our local media are keenly attuned to our unique circumstances as a small city-state, an open economy and a multiracial society.

They help interpret global events through a distinctively Singaporean lens, analysing their impact on our lives. This is ever more crucial in an era of heightened geopolitical contestation.

The local media also express our identity, values and priorities, so that the world gets a perspective from Singapore itself, and not through the filter of others.

Domestically, the local media not only report on events and developments, but also publish a balanced range of views, to inform the national debate and help foster a national consensus, not allowing disagreements to deepen into divisions in our society.

They help to sustain the common ground in our multiracial and multi-religious society, whilst preserving the voice of each of our communities through the vernacular media.

And they write "the first draft of our history", as Mr Goh Chok Tong put it in 1995, serving as an authoritative record of our collective experience as a people, giving future generations of Singaporeans a sense of how we saw the world, what was important to us, and how we built tomorrow's Singapore.

The local news media fulfil this role while upholding high standards of accuracy, objectivity and balance. These are traits that are ever more scarce in the raucous global information landscape, especially online.

The local media help to distinguish fact from falsehood, substance from posture, "what is high from what is low", as Mr Lee Kuan Yew put it in 1998.

As our nation faces increasingly complex challenges and trade-offs, our local media provide a highly credible flow of information and analysis upon which we form collective decisions.

Covid-19 vividly exemplified this. In the pandemic, Singaporeans looked to our local newspapers and channels as their trusted sources of critical information.

In a 2020 survey by the British pollster YouGov, seven in 10 Singaporeans said they trusted the local media's reporting on Covid-19.

In 2021, the Edelman trust barometer reports Singaporeans' trust in local media at 62 per cent - above the global average of 51 per cent, and above the United States number of 45 per cent, and the United Kingdom and France, which were both at 37 per cent.

It is critical to maintain this trust. Our local media industry has strived to do so, while adapting to changing industry trends and commercial imperatives.

The Government's approach to local media

Because of its importance to the national interest, the Government has been an active steward in this evolutionary process, to ensure the vitality and viability of our local media industry. Let me cite two examples.

In 1984, SPH was formed through a merger of the English, Chinese, and Malay language papers, with the Tamil press brought under its umbrella later in 1995.

The primary aim was to preserve the vernacular media amidst a gradual shift towards English.

As Mr Lee Kuan Yew explained at Lianhe Zaobao's 80th anniversary in 2003: "My worry as prime minister was how to preserve at least one quality Chinese newspaper and sustain it over the long term, when the trend in education was towards English."

Between 2000 and 2005, the print and broadcast industries launched into more direct competition, but subsequently re-consolidated. The aim was to foster greater competition between them and develop better local content to retain local audiences against rising foreign competition.

Ultimately the model did not prove to be viable, and the industry was rationalised in 2004 to preserve the viability of the two companies, one a core broadcaster and the other a core newspaper group.

Context and considerations for restructuring: Challenges facing media business globally

Today, yet again, our local news media is at a watershed.

Sweeping structural changes in the media and advertising industries, caused by technological advances and the Internet, have severely disrupted the traditional business model that relied on print advertising revenue.

The competition for eyeballs has intensified. In the borderless online space, our local news media must now compete not just with international news organisations, but also entertainment providers and user-generated content.

The cost of producing quality news content remains high, but revenues have plummeted.

Global print advertising revenue is decreasing by 7 per cent year on year. Meanwhile, news aggregators and other news providers are now able to provide so-called "free news services" without the cost of maintaining a high-quality newsroom.

Though digital ads are growing, it is the digital platforms, like social media and search engines, that capture the lion's share of the revenue.

Though the demand for quality news has not diminished, monetising digital initiatives is challenging, and the revenues of quality news platforms all over the world are falling sharply with little prospect of relief.

Most publications are now running deficits, and many newsrooms are shrinking, even closing.

More than a quarter of American newspapers have disappeared in the last 15 years, reducing the number of newsroom jobs by half. In the UK, more than half the country is no longer served by their own local newspapers.

South-east Asia has seen well-known newspapers change hands, restructure or shut down in recent years. The Jakarta Globe ceased printing and went fully online in 2015, and The Philippine Star had a majority stake acquired by the telecommunications group PLDT.

Ours is a small local market with just two main local news media organisations, SPH and Mediacorp. While there are potential synergies and opportunities for collaboration between them, we can ill afford the convulsions and closures we have seen elsewhere, with a consequential loss of diversity and choice in our media landscape.

Varied responses by media companies and governments worldwide

The response of media companies across the world has been varied, reflecting their own social and political contexts.

Many have resorted to cost-cutting to survive. News Corp, one of the largest media groups in the world, recorded a US$1.5 billion (S$2 billion) loss in 2020, and is embarking on a major cost-cutting exercise.

Digital news sites, which have ridden the wave of Internet media, have not been spared. Popular site Buzzfeed, which claimed a greater online audience than the print circulation of any single newspaper, has never made a profit and aborted its global expansion plans last year.

Billionaires have acquired established newspapers, for philanthropic or other motivations. Examples include Jeff Bezos of Amazon acquiring The Washington Post in 2013, and the Alibaba Group acquiring The South China Morning Post in 2016.

The Guardian in the UK has been owned by the Scott Trust, a non-profit organisation, since 1936. Even after drawing from the Trust, it made a £25 million (S$46.8 million) loss in 2020, and announced plans to cut 12 per cent of its workforce.

The New York Times has done especially well in making the digital pivot, but its success is not easy to replicate. Beyond digital transformation, it commands a global attention that is difficult for our media, writing from the perspective of a small country, to emulate.

European countries have had a long tradition of public funding of print media, recognising it as a public good.

The French government spends hundreds of millions of euros annually to support prominent papers like Le Monde and Le Figaro. Scandinavian governments have supported their newspapers for decades through direct subsidies and tax breaks.

In Singapore, we provide annual funding for public service broadcasting to Mediacorp. Last year, we also provided SPH Media with over $30 million through the national Jobs Support Scheme (JSS), and we were prepared to do more if the need arose.

In sum, the global news media industry is under severe structural pressure, and there is no universal solution. A few have succeeded; some are struggling; many have failed.

At this critical juncture, SPH Media must similarly chart its own course to revise - and if necessary, re-invent - its business model for the digital age.

Impact of structural forces on SPH

Against these industry headwinds, SPH has held out longer than most.

In fact, SPH's overall reach and readership has never been higher. SPH papers' total circulation has grown by 5 per cent from 2017 to 2020. In fact, The Straits Times' print and digital circulation has grown by about 20 per cent in these three years.

SPH has also made significant investments - of about $50 million a year for the last five years - to build digital capabilities and grow its readership.

It has augmented newsrooms with a wider range of tech capabilities, modified its operations to generate content round the clock, and launched new platforms for readers to engage its correspondents and experts.

In short, SPH papers, like Mediacorp in broadcasting, continue to be trusted and valued sources of news that are well read, which is a tribute to the professionalism of our journalists.

Their challenge today stems from an inability to monetise their gains in attracting and retaining readers on digital platforms.

Despite rising readership, SPH's media business has been steadily losing revenue. SPH announced last week that its media business had lost half its operating revenue in the past five years and posted its first-ever loss of $11.4 million in 2020. And that loss would have been deeper without the Government's JSS grant.

Looking ahead, SPH expects these trends to persist and widen.

Rising digital advertising revenue will not compensate for the fall in print advertising revenue. And there is limited scope to grow digital subscriptions in our small domestic market.

These secular trends affect SPH, Mediacorp and the global media industry.

SPH has been under persistent pressure to account to shareholders for the anaemic financial performance of its media business.

Hence, the company has implemented several cost-cutting and retrenchment exercises in recent years. But SPH has assessed that any further cuts would impair its ability to maintain quality journalism.

SPH has also spoken of its constraints as a listed company to make significant and sustained investments in its digital and newsroom capabilities, which may not yield near-term payoffs.

Hence, under the current structure, there is a serious risk that SPH's media capabilities will be hollowed out.

Without sustained investment in capacity building and a digital pivot, its quality and circulation will fall, and this in turn will worsen financials and cause further disinvestment.

And the immediate pressure will inevitably be on our vernacular papers, some with relatively small circulations, which would have a profound detrimental impact on the multiracial fabric of our society.

Mr Speaker Sir, this is the sobering picture of what lies ahead if we fail to act now and take proactive steps.

Without a responsible and high-quality local media, the quality of our public debate and discourse will be compromised, and we will slowly but inexorably become less cohesive as a society.

Given what is at stake, the Government must take a long-term view, and adopt measures to secure the sustainability of our local media.

The Government therefore carefully studied the proposal from SPH.

SPH proposes to restructure and transfer the ownership of its media business to a company limited by guarantee.

It will first form a new subsidiary and transfer the media-related businesses, properties, and some cash and SPH shares and Reit (real estate investment trust) units to the subsidiary. Subsequently, if SPH shareholders give their approval, the subsidiary will be transferred to the CLG.

The CLG will be separate from the listed company, no longer run by the SPH management. It will operate as a revenue-seeking business, subject to the usual commercial disciplines. However, any operating surplus will be ploughed back into the media business, rather than distributed to shareholders as dividends. In that sense, it will be "not for-profit" to the members of the CLG.

SPH's proposal is not a panacea for the challenges faced by its news media business. But it is an essential first step if the media business is to adapt to the digital and commercial realities of the industry.

The Government therefore supports SPH's restructuring proposal and is willing to provide funding support to the CLG.

Let me summarise our thinking.

A high-quality and trusted national media, with an instinctive understanding of our national interests and constraints, is essential to Singapore.

Throughout our history, the Government has aimed to develop and sustain such a media industry in Singapore.

However, the current SPH model of a news media business within a listed company is no longer viable. While the media business' traditional revenue streams are declining sharply, significant investments are needed to build digital and other capabilities for the long term.

A company limited by guarantee is one model to remove the news media business from the constraints of a listed company, while the news business under the CLG invests in strategic imperatives.

But the CLG will still have to find new sources of funding to meet the expected financial shortfalls in the news business.

The Government is willing to help fund the proposed CLG - while ensuring fiscal discipline and accountability - in areas like digital innovation and capability development, as part of a long-term sustainable business plan.

We already have a similar financing model with Mediacorp, our core national broadcaster, which has been working well.

Having such national broadcasters, newspaper publishers and online news platforms is a public good that benefits the whole of society.

Although the business and financing model will change, the Government does not intend nor expect this to affect the relationship between the Ministry of Communications and Information (MCI) and the SPH newsroom.

The Government is mindful that our local news media must remain credible institutions that are trusted by Singaporeans, and that it remains the responsibility of the editors and journalists in SPH Media to report news and diverse opinions objectively, and from a Singaporean point of view.

Road ahead for the CLG: Ingredients for success

Looking ahead, the CLG's success will be determined by three key factors.

First, strong leadership, with the support of its stakeholders, to set the strategic vision and execute the organisational transformation.

Second, a robust business strategy that can be sustained under the new structure with the requisite resources.

Third, a strong and capable team of professionals in the newsrooms who will maintain the high standards that we have come to expect of this cherished national news organisation.

In this regard, the Newspaper and Printing Presses Act (NPPA) is a key regulatory instrument that will apply to the news entities under the CLG.

The NPPA was introduced in 1974. Among other requirements, NPPA requires newspaper companies like SPH to issue two classes of shares - ordinary shares, and management shares.

In particular, management shareholders have special voting rights on resolutions relating to the appointment of directors and staff of the newspaper company.

The intent has always been for these management shares to be held by reputable and established institutions, so that the stewardship of the newspaper is entrusted to entities with an abiding interest in, and commitment to, Singapore's stability and success.

Currently, the management shareholders of SPH are OCBC, Great Eastern, UOB, DBS, Singtel, NTUC Income, Temasek via Fullerton, the National University of Singapore and Nanyang Technological University.

As SPH restructures its media operations, we want to ensure that its management shareholders continue serving as custodians of the CLG.

I have therefore met and consulted the representatives of the management shareholders. They have all agreed to form the CLG, and to be its founding members. In due course, the membership will be expanded to include newer and more diverse institutions as stakeholders of the CLG.

Given the national importance of this undertaking and the scale of the challenge, they have all agreed that the chairman should be Mr Khaw Boon Wan. With his high standing and more than 25 years of public service experience in various senior appointments, Mr Khaw will be able to provide strong strategic leadership for the CLG.

To ensure the long-term viability of the enterprise, the Government also stands ready to provide the CLG with funding in areas like digital innovation and capability development.

The new media company must have a long-term, sustainable business model with different revenue sources - including traditional advertising and subscription revenues, complemented by government funding, and contributions from its management shareholders and benefactors as other components.

We expect that after the transfer of the media business, the CLG will formulate detailed proposals on its strategic plan to build the business. And this will form the basis for government funding and support.

After shareholder approval and completion of the proposed restructuring, MCI will lift the shareholding controls imposed on the listed SPH entity.

The NPPA will then apply to the new media company, under the CLG's charge. The NPPA will not apply to the CLG, but appropriate safeguards will be incorporated in its Constitution.

Mr Speaker Sir, we want the news media business to succeed in this critical transition while continuing to fulfil its vital role in our society.

As I said at the beginning of this statement, a high-quality, professional and trusted media, with news reported by Singaporeans for Singaporeans, is essential to the fabric of our nation.

That mission statement remains unchanged. Within the framework of the NPPA, the local media operate independently of the Government. They report and analyse the news fully and objectively, not holding back bad news, nor advancing any singular ideological view or agenda, but focused on Singapore's interest. The Government and the media will not see eye to eye on every issue and incident - but that is to be expected.

And that is how SPH, and Mediacorp, have operated hitherto. And that is how the Government expects the CLG to continue to operate after the proposed restructuring.

The CLG must maintain the reputation and high level of trust that SPH has built with generations of readers, domestically and internationally.


The restructuring of SPH is a watershed in the evolution of our local news media. But we are convinced that it is essential if our news media are to survive as high-quality news outlets. And the Government will do our part to sustain a trusted news media in Singapore.

Our news media are not just economic entities. They are cherished institutions that reflect our values; whose "past, present and future are intrinsically tied to this nation", as PM Lee put it at The Straits Times' 170th anniversary.

The newsrooms are, and must continue to be, home to talented editors and journalists, whose professionalism and diligence have built credibility and trust in our newspapers.

As 19-year-old A-level graduate Keng Xin Yi said in today's ST: "It is important to keep SPH Media alive and motivated to produce quality newspapers every day. ST has been serving Singaporeans with diligence and high standards, educating us from the time when we knew little about the world. I hope we can express our gratitude by supporting and respecting these dedicated journalists. Together we can keep our source of knowledge going and keep our ST alive. I want ST to be a part of the lives of my future children and grandchildren too."

The success of this restructuring, and the future of our local news media, turns ultimately on our journalists' commitment to this mission, and the support of our citizens like Xin Yi. And I would like to conclude by assuring our journalists, and all Singaporeans, of this Government's abiding support for this critical national endeavour.

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