SPH Media must chart own course to revise, reinvent business model: Iswaran

Mr Iswaran pointed out that in South-east Asia, well-known newspapers have changed hands, restructured or shut down in recent years. ST PHOTO: GAVIN FOO

SINGAPORE - The Republic's media landscape can "ill-afford" convulsions and closures seen around the world without risking a consequential loss of diversity and choice, said Minister for Communications and Information S. Iswaran on Monday (May 10).

He was making a ministerial statement in Parliament on a proposal by Singapore Press Holdings (SPH) to restructure its media business into a not-for-profit entity.

The proposal, announced last week, was backed by the Government, which stated it was prepared to provide funding support for the entity.

Mr Iswaran observed that most publications globally are now running deficits, with many newsrooms shrinking and even closing.

He pointed out that in South-east Asia, well-known newspapers have changed hands, restructured or shut down in recent years.

The Jakarta Globe, for example, ceased printing and went fully online in 2015, and the Philippine Star had a majority stake acquired by the telecommunications group PLDT.

Elsewhere, more than a quarter of American newspapers have disappeared in the last 15 years, reducing the number of newsroom jobs by half. And in Britain, more than half the country is no longer served by local newspapers, Mr Iswaran noted.

He added that even digital news sites - which have ridden the wave of Internet media - as well as "rare" profitable papers are under continuing pressure.

Popular site Buzzfeed, which claimed a greater online audience than the print circulation of any single newspaper, has never made a profit and was compelled to abort its global expansion plans last year, said Mr Iswaran.

The Wall Street Journal has had to change its operating model to keep afloat. While investing in a special innovation team of 150 employees, it also had to thin out its print edition and lay off staff in 2016.

The New York Times reached 7.5 million subscribers in 2020, but saw advertising revenue plunge by 26 per cent the same year, said Mr Iswaran.

"The New York Times' 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," he added. "It is also noteworthy that the New York Times and Washington Post tripled their digital subscriptions during the period of the Trump administration."

The Financial Times, meanwhile, enjoys the advantage of being a specialist paper, said Mr Iswaran, with a small but affluent readership and strong advertising appeal. Still, in 2015, Japanese media group Nikkei bought the paper from Britain's Pearson.

"So even a successful newspaper is susceptible to takeover," said Mr Iswaran.

Funding models

The minister pointed out that sources of support - be it public, private, philanthropic or others - have varied widely around the world.

Private sources include wealthy financial backers or funds, with some billionaires acquiring established newspapers.

Hong Kong's South China Morning Post (SCMP), for one, was acquired by the Jack Ma-founded Chinese multinational tech group Alibaba in 2016. It was previously owned by Mr Rupert Murdoch's NewsCorp until 1993, before being acquired by Malaysian real estate tycoon Robert Kuok.

"With the largesse of Alibaba, SCMP lifted the paywall on its articles, and was reported to have increased its international reach more than fourfold within three years," said Mr Iswaran. "Yet it remained loss-making. In 2020, SCMP restored the paywall and subscription model, acknowledging that the advertising model is no longer enough to sustain high-quality news."

He also pointed to The Washington Post, bought by Mr Jeff Bezos of Amazon in 2013 after 80 years of ownership by the Graham family - which had sustained the paper partly from the proceeds of its Kaplan education business.

In the six years before the sale, the paper's operating revenue fell by 44 per cent, Mr Iswaran observed.

He added that other major newspapers now owned by billionaires include the Los Angeles Times. Even hedge funds have gotten into the act, he said, noting that Alden Global Capital has acquired over 200 US newspapers, leaving extensive layoffs and cost-cutting measures in its wake.

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Some non-profit organisations also fund newspapers, such as with the Scott Trust's ownership of The Guardian in Britain since 1936.

"It has done well against global competition - nearly two-thirds of its readers come from outside the UK," said Mr Iswaran. "But in 2020, after making a £25 million (S$46 million) loss even after drawing from the Trust, The Guardian announced plans to cut 12 per cent of its workforce, saying that 'we face unsustainable annual losses in future years unless we take decisive action'."

Public funding of broadcast media, on the other hand, is well-known - but less well-known is public funding of print media, which has a long tradition in European countries, said the minister.

"The French government spends hundreds of millions of euros annually to support the press, including prominent papers like Le Monde and Le Figaro," he noted. "It has done so for over half a century, with annual subsidies at times exceeding a billion euros (S$1.6 billion)."

Mr Iswaran said that Scandinavian governments have also supported their newspapers for decades, through direct subsidies and tax breaks. "In 2020 alone, the Norwegian Media Authority gave press subsidies of €43 million, while Sweden rendered a €65 million aid package to buffer the impact of the pandemic."

In Singapore, said Mr Iswaran, Mediacorp is provided with annual funding for public service broadcasting. Last year, SPH Media also received over $30 million through the Jobs Support Scheme, with the Government prepared to do more if the need arose, said Mr Iswaran.

He said that local news media was at a "watershed" today, and must compete not just with international news organisations but also entertainment providers and user-generated content.

"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," said Mr Iswaran. "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."

The minister concluded that the global news media industry was under severe structural pressure, with no universal solution. "A few have succeeded, some are struggling, many have failed," he said.

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

Read key highlights of the ministerial statement on SPH media restructuring here

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