SPH Media can get funding from mix of public, private contributions

The proposed new entity that will run Singapore Press Holdings' (SPH) media business will be able to receive funding from a mix of public and private contributions, including additional financial support from the Government, said SPH chairman Lee Boon Yang.

Explaining how the funding model could work for the new company at a press conference yesterday, he said SPH will transfer all its media assets to a newly incorporated, wholly owned subsidiary, SPH Media.

These include its leasehold properties such as News Centre in Toa Payoh North and Print Centre in Jurong, related information technology and intellectual property assets such as rights to the titles of all its publications, and stakes in four of its digital media investments - AsiaOne, DC Frontiers, Target Media and Singapore Media Exchange.

SPH will also inject $80 million in cash as well as $30 million in SPH shares and SPH Reit units into the new entity, which will eventually become a company limited by guarantee (CLG).

This injection of capital will give the new entity three to four years, "depending on circumstances, to reach a safe landing in terms of a long-term sustainable funding model, which will involve public-private partnership", Dr Lee said.

The new company will be able to reinvest its operating revenue into its media operations. And as a not-for-profit organisation, it would also be able to source for additional public funds, something that cannot be done if it is part of a listed company, he noted.

"It is also possible for the CLG to receive additional financial support from the Government to help it to achieve its mission as a public information provider for Singapore," he said.

"So that would ensure that it would have a sustainable financial model for the future."

Asked how the new company will preserve its editorial independence while receiving external funding, including possibly from the Government, Dr Lee said SPH's media business has striven to serve its readers in an objective, accurate and responsible manner.

"I believe that over the 37-odd years or so, they have achieved this mission of serving the public, the news-consuming public, and earning their trust, confidence and also respect as a reliable source of news and information," he said.

These deeply embedded values will be "ported over" to the new entity which will be charged with the mission to "preserve this level of responsible, objective and accurate journalism", he said, adding that "this is something that the CLG will pay great attention to".

"They will obviously receive public, private funding in the process, but they will not stray from the mission to maintain the credibility, trustworthiness and respect of the media by the Singapore public.

"So I'm quite confident that despite some perceptions otherwise, that SPH Media in its new home will continue to uphold the values that have brought it to this level of respect and trust by its readers or online audience."

Asked if the new revenue model meant "the media business will now pivot to emphasise editorial integrity, for example, ahead of advertiser interests", Dr Lee said he was confident that what has upheld editorial integrity for SPH Media over the years will continue.

"There will be no difference, that editorial integrity will take precedence. And I'm confident that under the CLG, what I call the DNA of SPH Media will still be there and it will manifest itself.

"And rightly so because editorial integrity will have to come ahead of pure financial consideration," he added.

He noted that the restructuring exercise comes amid market pressures and changing media consumption habits. "One could say that you could change your whole approach to our media titles and make them perhaps more acceptable to what you think will sell.

"But that would do damage to the media capabilities that we spent so much effort and resources to build up over the years," he said.

"We believe that we still have this public information provider duty to uphold, and we want to maintain the standard."

SPH chief executive Ng Yat Chung said he took umbrage at the question from CNA Digital about revenue and editorial integrity.

"There are reporters (from media outlets) here who received substantial funding from various sources, and I don't believe that you would describe yourself as bowing to the needs of advertisers in doing your job," he said.

A public company limited by guarantee (CLG) is usually formed to carry out non-profit making activities that have some public or national interest, such as arts promotion or tertiary education.

It has members instead of shareholders who agree to pay a fixed sum in case the company is wound up, according to the Accounting and Corporate Regulatory Authority (Acra).

In comparison, a company limited by shares has shareholders and may raise capital by offering shares or debentures to the public.

That said, CLGs have a corporate status and have to be registered with Acra like other business entities and be governed by the Companies Act. CLGs are liable to pay corporate tax and may qualify for tax deductions or exemptions.

A number of news organisations globally operate on such a model through media trusts and foundations. They include The Guardian in Britain, which has been controlled by the Scott Trust since 1936.

Germany's largest media conglomerate Bertelsmann is owned by a foundation, while the Philadelphia Inquirer in the United States is owned by the Lenfest Institute.

CLGs are prohibited from paying dividends and profits to its members, according to SingaporeLegalAdvice.com. It means any profits will be ploughed back into the company to enable it to fulfil its mission.

Upon incorporation, the CLG is considered to have a separate legal entity and is distinct from its members, added the legal portal. This means the company may sue or be sued in its own name, and its members will be protected from any liabilities it incurs.

Some CLGs may obtain charity status, exempting them from tax.

Some notable CLGs here are the National University of Singapore, Temasek Foundation and The Esplanade Co - a CLG with charity and Institution of a Public Character status.

SPH has always received advertising, but it has "never, never conceded to the needs of advertisers", he said, adding that SPH Media would continue to provide fair, reliable and credible reporting.

"The fact that you dare to question the SPH title for, in your words, 'conceding to the advertisers', I take umbrage in that comment because I don't believe that even where you come from, you concede. In doing your job, you do not concede to the needs of advertisers. So I must call this out. Chairman is a gentleman, I'm not.

"The purpose of doing this is to make sure that SPH Media will continue to do the job it has done so well for so long," Mr Ng added.

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