SPH Completes Restructuring Of Media Business
On 1 December 2021, Singapore Press Holdings (SPH) announced that it had completed restructuring of its loss-making media business. With the restructuring completed, the entire media related business, together with some 2,500 staff under its employ, has been transferred for a nominal price of S$1 to SPH Media Trust (SMT), a not-for-profit company limited by guarantee. With guidance from your economics tutor Singapore in economics tuition Singapore, discuss the reasons behind SPH’s restricting of media business.
A Turning Point For SPH
In its press release, Chairman of SPH, Dr Lee Boon Yang described the completion of SPH Media Restructuring as “a major turning point for SPH”. He also expressed confidence that SPH Media Trust would provide “a solid foundation for high-quality journalism in Singapore”. According to SMT’s interim chief executive, Mr Patrick Daniel, SPH’s media business has recorded declining revenues in recent years. To find out more about SPH’s financial performance, you may consult your economics tutor Singapore in your economics tuition Singapore class. Mr Edmund Quek is widely regarded as the best economics tutor Singapore. His economics tuition Singapore centre, Economics Cafe Learning Centre is conveniently located within five minutes’ walk from the Bishan MRT station. From S$1 billion profit to first-ever loss of S$40 million, the local media empire was forced into a drastic change to arrest this “downward spiral”.
In recent years, SPH has undergone a few restructuring exercises and retrenchments to cut costs. In discussion with your economics tutor Singapore in economics tuition Singapore, explain the economic and social implications of retrenchments. You may also discuss in groups with other students from the same economics tuition Singapore class, other means to cut costs. In 2020 following its first ever loss, SPH laid off 140 staff from its Media Solutions Division and SPH Magazines, accounting for about five per cent of its total headcount. In 2019, SPH retrenched five per cent of staff following a 23 per cent fall in its net profit to S$213 million. Some 130 staff were affected, of which 70 were laid off. In 2017, 130 staff were retrenched, in addition to 100 job reductions.
Severely Disrupted Traditional Business Model
SPH’s business model has been structured in a way that is heavily reliant on print advertising. With the onset of Covid-19 pandemic, advertising revenue has been severely affected. In consultation with your economics tutor Singapore in economics tuition Singapore, discuss the implications of Covid-19 pandemic on print advertising. In March 2020, SPH announced a pay cut of five per cent and 10 per cent for its senior management and CEO respectively.
Following its decision to restructure media business, SPH received acquisition offers from Cuscaden Peak and Keppel Corporation. Cuscaden Peak, a consortium backed by Hotel Properties, CLA Real Estate Holdings and Mapletree Investments, initially gave an all-cash offer of S$2.10 per share to acquire SPH’s non media assets. It later increased its bid to S$2.36 per share after Keppel’s increased bid of S$2.40 per share, comprising S$1.602 cash and S$0.798 worth of SPH REIT units. To add to the appeal of its all-cash offer, Cuscaden Peak has waived its rights to walk away from its final bid, in case of a material adverse effect. It also obtained final outstanding approval from its board. In contrast, Keppel Corporation’s proposal has yet to be approved by its shareholders. With help from your economics tutor Singapore in your economics tuition Singapore class, compare the two offers by Cuscaden Peak and Keppel Corporation.
Analysts generally view Cuscaden Peak’s offer as superior to Keppel Corporation’s. The ball is now in SPH’s court. It is up to their shareholders to compare the two offers and decide which one to accept.
Linda Geng
Economics Tuition Singapore @ Economics Cafe
Principal Economics Tutor: Mr. Edmund Quek