Singapore Press Holdings Limited Reorganizes its Business (Hint: It’s Not Business As Usual)

Singapore Press Holdings Limited  (SGX: T39) has been hinting that there will be changes to its core media business. Yesterday, we got the first whiff of what it looks like.

SPH may be best known as a publisher of most of the major newspapers here in Singapore. The media giant also has businesses in property development and investment and other activities such as events management.

The company’s core media business has been suffering over the past few years. For its financial year ended 31 August 2016 (FY2016), SPH saw its Media segment revenue fall by 7.6%. This is big for SPH, as the media segment makes up almost 75% of total sales.

Winds of change

In the third-quarter of FY2016, SPH’s chief executive Alan Chan said that the company will be reviewing its core media business. He said:

“Given the challenging market conditions, [SPH] has embarked on a comprehensive review of our core Media business. The aim is to better address the evolving needs of our advertising customers and deliver effective, integrated solutions across our various media platforms.

In addition, we will critically examine our product portfolio and also identify areas where we can further enhance our operational efficiency”

The decision to review the core media business came after SPH’s revenue had declined over the past four fiscal years. Yesterday, SPH shared a little more about the comprehensive review.

SPH said that it will be right-sizing its business. In simpler terms, it involves a reduction in its employee headcount of up to 10% over the next two years. Two publications, My Paper and The New Paper (TNP), will also be merged to form a revamped TNP which will be distributed for free from December this year.

Source: SPH’s earnings presentation

For context, TNP has a paid circulation of around 60,000 per day. SPH envisions that making the publication free could increase circulation to up to 300,000 copies.

The future’s in the air

Yet, the changes could be just one of many we can expect from SPH in the future. Chan added this statement as well:

“We have had to take difficult decisions on cost control measures to improve operational efficiency. We will continue to innovate and invest in our media products to stay ahead and relevant. At the same time, we will grow our business adjacencies to diversify revenue streams and maximise stakeholder value.”

As Chan puts it, staying relevant in the media business could be the main driver for any further changes that come in the 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 contributor Chin Hui Leong doesn’t own shares in any companies mentioned.