SPH cuts costs to keep jobs

Dec 4, 2008
SPH cuts costs to keep jobs
By Chua Hian Hou

'This is a multi-sector, global phenomenon - quite unlike anything we have seen since the 1930s,' said Dr Tan. -- ST PHOTO: CAROLINE CHIA
THE economic crisis will hurt earnings, but multimedia group Singapore Press Holdings (SPH) has taken cost-cutting measures to help staff keep their jobs as far as possible.

These include freezing wages of senior management and slowing hiring this year to counter a recession that may last 'several quarters', said SPH chairman Tony Tan on Thursday.

'This is a multi-sector, global phenomenon - quite unlike anything we have seen since the 1930s,' said Dr Tan, Singapore's former deputy prime minister who is also the deputy chairman of the Government of Singapore Investment Corp (GIC), at the company's annual general meeting at News Centre, Toa Payoh North on Thursday morning.

'With its global linkages and open economy, Singapore will be buffeted by the global economic storms.'

In anticipation of a slowdown, Dr Tan said SPH has earlier this year 'slowed down our hiring, instituted a pay freeze for all senior management staff'.

The company, which has some 3,000 employees, has also 'tightened our operations and strengthened our financial resources', he said.

These measures should help SPH 'ride out the downturn although it will be painful'.

Singapore is currently in a recession. The government has cut Singapore's growth for the fourth time this year and warned that it may even contract next year.

SPH shares was 1 cent up to $3.51 as at 1pm.

New media - a threat, an opportunity, and how to get there profitably - cropped up again at the AGM.

Shareholders raised question after question on this issue, from its continued losses in this area to how it would recruit talent to propel its multimedia initiatives forward, at the hour-long meeting.

SPH CEO Alan Chan said while SPH remains a highly profitable publishing business that enjoys the 'best (profit) margins in the world', it recognises that publishing is a 'mature industry'.

Thus, it has no choice but to 'prepare for the inevitable ... if the tastes of readers shift' away from mainstream media like newspapers and magazines and invest in new media, he said.

While it continues to suffer losses, such investments are necessary so as to 'sow the seeds of a bigger tree', he added.

In recent years, SPH has launched new online products like its citizen journalism site Stomp, online TV channel The Straits Times Razor TV. It has also made acquisitions in this area, including popular tech forum HardwareZone and Shareinvestor.com.

Mr Tony Mallek, executive vice-president of finance, said the company has no direct exposure to 'toxic investments' and a small, indirect exposure to Lehman Brothers, adding that the impact of the Lehman-linked investments is 'insignificant' to SPH's business.

Despite of the pessimism displayed by this article, I am still optimistic towards SPH. Just like what the SPH CEO Alan Chua said, SPH is a highly profitable business. This is a situation which is unique to Singapore. This is because the government has a huge stake in the media industry thus SPH has no competitors in Singapore. Virtually all the newspapers in Singapore are published by SPH. A business which has no competitors is definitely a cash cow since it is a stable business which can give out dividends regularly. Despite of the threat of new media, I believe the effect is not as pronounced as what the articles suggest. Perhaps it is a growing threat, but the majority of the population still read the papers. Now that this bear market have made SPH cheaper, this counter will be worth an another look.

No person shall print or publish or assist in the printing or publishing of any newspaper in Singapore unless the chief editor or the proprietor of the newspaper has previously obtained a permit granted by the Minister authorising the publication thereof, which permit the Minister may in his discretion grant, refuse or revoke, or grant subject to conditions to be endorsed thereon.
—Newspaper and Printing Presses Act of 1974, Cap. 206, Sec. 21. —(1)