Analysts say move timely but poses questions

The move to restructure Singapore Press Holdings' (SPH) media business into a not-for-profit entity is a timely move, said several analysts, although the plan did raise several questions.

DBS analyst Alfie Yeo said there has been a structural decline in SPH's media business, which has been loss-making since financial year 2020. "Restructuring this business away from their books would improve profitability, given the losses it has to take in if the media business were to be part of the group."

Assistant professor of finance Aurobindo Ghosh from Singapore Management University's Lee Kong Chian School of Business said being a listed company entails significant pressure from shareholders for quarterly revenue and profit generation.

"Restructuring into a listed SPH and a separate not-for-profit entity SPH Media might help shelve such scrutiny," said Prof Ghosh, who added that different models such as The Guardian's voluntary contribution system can be considered as other avenues of funding. The British newspaper urges readers to pay a sum of their choosing.

Securities Investors Association (Singapore) president and chief executive David Gerald asked why the media business could not be profitable and queried the upfront capitalisation of the proposed new entity.

He noted that the media business has been declining for the past five years with its operating revenue halved during this period. However, he said that yesterday's announcement came as a surprise to many as SPH has been reviewing and diversifying its investments for several years, and has implemented strategic initiatives to produce more digital content.

He noted that other news media outlets have had continued success in an even more competitive and crowded space.

"Many shareholders and investors are therefore at a loss as to why the SPH media business would not be profitable, given the near monopoly that SPH has for its print," he said.

Pointing to SPH's upfront capitalisation of $110 million, he said: "Surely, SPH will have to answer the shareholders who may be confounded by this parting gift to SPH Media, especially since they view this segment as having value or still revenue-generating and can turn profitable over time."

At a press conference earlier, SPH chairman Lee Boon Yang had touched on the capitalisation of the new entity and said that shareholders should understand that "all the assets... of SPH, the group as it is today, came about from the media operations of past years".

Mr Gerald said that with the property segment driving the group's operating revenue and profits after the restructuring, the company will also need to clarify its role in relation to SPH Reit, he said.

• Additional reporting by Grace Ho