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Is Singapore Press Holdings The Next Encyclopedia Business?

Do you still remember there is such a thing called the encyclopedia?

I can still remember the day when my parents bought the one and only encyclopedia set for our home. Spending hours on end reading each volume of the encyclopedia was one of my favourite past time, until the internet came along.

With the rise of the internet and information exploding online, there is almost no need for people to refer to an encyclopedia any more. I can only imagine what has happened to the company that produced the encyclopedia I read as a child.

Yet, new technologies are emerging constantly and how they evolved would have a great impact on all type of business. Is there a company in Singapore that might become the next encyclopedia business?

Looking at the 30 constituents of the Straits Times Index (SGX: ^STI), the company that has the highest risk of facing obsolescence might be Singapore Press Holdings Limited (SGX: T39).

The company is traditionally in the print business. However, as more people have increasingly more choices from where and how to get their information, the traditional printed newspapers and magazine might be facing a declining prospect for the future.

Yet today, SPH’s newspaper and magazine business still contributes about 77% of its overall revenue. If they are unable to find new ways of generating revenue and profit from, SPH, especially its newspaper segment, might become less relevant in the future.

To give credit to the company, it has already started the process of changing its business model. It has a sizeable property business now, even launching its own sponsored REIT, namely, SPH REIT (SGX: SK6U).

Moreover, most of its newspaper and magazines now have print-plus-digital distribution instead of focusing solely on the print business. However, viewing the print versus digital distribution of its newspaper, it seems digital is still a small part of the business.

For a company facing an almost inevitable migration away from print in the future, one must be willing to push forward initiatives that might cannibalise its printed business in the short term, in order to create a sustainable future for the company.

Things to ponder

With so much legacy attached to its printed business, can SPH successful navigate towards a stronger business in the future? Or will the company face the decline of its print business but unable to transform itself for the digital future?

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn’t own shares in any companies mentioned.