SPH: Improvement in digital 'unable to offset' print ad woes

Singapore Press Holdings (SPH) is seeing a decline in its media sector in the third quarter of the fiscal year of 2020. According to its most recent report, SPH's print ad revenue decreased by 51.4% year-on-year in Q3 of this financial year. Print ads include display, classified (recruitment and notices), and newspaper ads. While SPH's display ads saw a decrease of 55.8%, its classified ads saw a decrease of 42.7%. 

Digital advertising revenue registered a decline of 3.7% in the same period. However, overall total circulation rose by 9.5%, with digital circulation levels close to print circulation levels. Although its total digital revenue continues to improve, SPH said it will be unable to offset the decline in print ad revenue.

For its retail business, SPH also saw "significant decline" in footfall during the circuit breaker period from April to June. Compared to the same time last year, it recorded a 59% decrease of footfall in its shopping centre Paragon, 52% in Clementi Mall, and 29% in The Seletar Mall. 

As such, SPH is expecting to have significant lower operating profit than the SG$187 million recorded last year. According to the report, COVID-19 has had an adverse impact across all its business segments. Currently, its priority is to conserve cash, adding that there is a lack of clarity over the long-term impact on the group’s businesses. The Group said it will be conducting a revaluation of its investment properties on 31 August. However, COVID-19 is expected to negatively impact the revaluation outcome. Meanwhile, just two weeks ago, SPH said it will be developing and operating data-centre facilities in Genting Lane, according to the Straits Times (ST). This will be done through a joint venture with SPH's wholly owned subsidary TPM and two Keppel Corporation subsidiaries, Keppel Griffin and Geras DC. It is added that the joint venture unit will acquire a leasehold interest from another SPH unit, which is valued at SG$50 million.

The pandemic hasn't been easy on the media company which was already struggling in recent times. Earlier in March, SPH CEO Ng Yat Chung took a pay cut of 10% in show of solidarity with the nation amidst the COVID-19 pandemic. SPH's senior management staff also saw a 5% reduction in salary, while its board members took a voluntary 10% pay cut in directors' fees. The cuts were effective from April 2020 and will be reviewed at the end of the year, according to an SGX filing. Ng said the global pandemic has affected its businesses and posed challenges to its stakeholders.

According to him, the senior management and board members have volunteered the pay cuts to better position the company to ride out this difficult time with SPH's stakeholders. "This is on top of the assistance measures we have rolled out to employees affected by the crisis. We will continue to practise prudence for business sustainability and look out for the right opportunities at the appropriate time for long term competitiveness," Ng added.

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