Singapore Press Holdings, publisher of The Straits Times newspaper and other publications says it has already felt the impact of COVID-19 on its first half results of fiscal 2020 (1H FY20) and is bracing for a prolonged impact across all its business segments.
Media revenues shrank 14.3% or $42.3 million to $253.9 million in the first half as newspaper print advertising slid 20%. COVID-19 has had a detrimental impact on advertising across all most sectors besides government spending, the company said.
Overall, pre-tax profit rose 2.6% in 1H FY 20. But unlike the past, when SPH could continue to count on its shopping mall and student housing businesses to offset media declines, the company now warns all segments have been similarly disrupted.
"In view of the challenging business environment, the Group’s priority is to conserve cash to sustain its businesses and continue with the digital transformation of the Media segment," SPH said in its earnings release.
SPH board members have taken a voluntary 10% cut to directors' fees while CEO Ng Yat Chung is also taking a 10% pay cut. Other senior staff are reducing their pay by 5% with all cuts effective April 2020 to be renewed at the end of the year.
Other SPH investment activities have been put on hold and the company's interim dividend has been cut to 1.5 cents per share.
On the media side specifically, SPH says it is streamling its businesses to raise efficiency while reviewing its business model to trim costs. It also notes it is scrutinising non-strategic businesses with a view to exit if possible.
Shift from print to digital continues
The good news for SPH's media business is that its digital products and overall market share continues to grow, it says. Daily average newspaper digital sales increased by 50% to 110,355 copies, outpacing the 11% drop in daily average newspaper print sales of 53,109 copies.
Digital ad revenue rose 3.8% in the first half of fiscal 2020 from a year ago, with total digital revenue up 13.3% in the same period.
The company also notes that while COVID-19 will affect the media business negatively, its digital readership has risen fourfold since the Singapore government raised the country's alert level to DORSCON orange, from 1.4 million page views in January to 5.6 million in February. With higher traffic levels, the company notes the potential for digital conversion and subscription is also higher.