SPH Media CLG must set out new strategic direction, diversify funding: S Iswaran

THE new company limited by guarantee (CLG) that holds the media businesses of Singapore Press Holdings (SPH) will need to put forward a plan with a strategic business direction for a sustainable future. Only after this is done, and shareholders have approved the restructuring of SPH, will the government be able to decide how much public funding is needed to support the entity, said Minister for Communications and Information S Iswaran on Monday.

Mr Iswaran was responding to questions from Leader of the Opposition Pritam Singh on the size of funding the government has set aside to support the CLG, and whether this would be capped.

SPH, which publishes The Business Times, had last Thursday proposed a restructuring that involves a transfer of the media business to a CLG. This structure will allow any future profits from the media business to be reinvested into the media operations rather than be distributed to shareholders.

Mr Iswaran said the government has always been willing to support investments in capability development, and it is up to respective organisations to develop a plan and make proposals.

The new CLG would need to formulate its plans and "put on the table what it sees as its strategic business direction going forward, and in that matrix, the different sources of revenues that it expects or anticipates, and what role will the government funding... play in that matrix".

He also emphasised that the CLG must continue to be commercially driven. "We fully expect the entity to seek out advertising revenue, circulation or subscription revenue, and other sources of funding," he said. "But we fully expect that government funding will be a component of that funding matrix."

Under the proposed restructuring, SPH will also capitalise the media business with a cash injection of S$80 million, S$30 million worth of SPH shares and SPH Reit units, as well as SPH's stakes in four of its digital media investments.

Mr Singh had also asked if the Ministry of Communications and Information (MCI) viewed the SPH contribution as reasonable.

Mr Iswaran emphasised that this was a matter to be put to the shareholders. "I do not want to preempt any case that the management and the board will make, but I can say that the government's focus has been very clearly on the news media business, and its viability going forward," he said.

Member of Parliament Liang Eng Hwa also asked if the government had considered other options, such as privatising SPH or providing the company with direct government support such as annual grants.

Mr Iswaran said it was debatable whether providing grants to a listed company was a good model.

"If we channel a certain amount of funding to the listed company, and the listed company then makes profits, and then it distributes dividends to its shareholders, the question that then can be asked is: Is this a case of taxpayers subsidising returns to shareholders?"

Mr Iswaran also clarified that the government's support for the deal was from the perspective of whether the deal is able to support the goals of preserving the media business.

"We're supporting it, not because of the shareholder value proposition. That is for SPH and its management, and its directors and independent financial advisor and independent directors, to explain to their shareholders," he said.

"What we have before us is the proposal that the board and management of SPH put to us after their own deliberations of various possibilities," Mr Iswaran added.

"Our lens is purely from the point of view of how do we ensure a quality professional trusted news media continues to succeed in Singapore, and that's the basis on which we have expressed our approval for the restructuring."