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Panpa Bulletin : May 2010
The Conductor A STRATEGY to build a successful newspaper company in this era of economic turbulence and digital competition can be elusive because there are now so many variables. Even if the plan has to change, at least there is always a sense of direction and purpose. Quality journalism is a mantra, quickly be- coming a cliché, trotted out by pundits to cap- ture the essence of a formula for the industry's future. Yet, the challenge is much more than that -- and Singapore Press Holdings (SPH) arguably offers a greater insight into the future shape of publishers than any in the region. With digital investments across Asia, a steadily growing property portfolio and 17 newspaper titles covering four languages, SPH is a fascinating snapshot of a modern-day pub- lisher battling to find new readers while build- ing revenue streams to cope with a transition from its print roots. It has an unassailable position on the island nation of Singapore and therefore confronts fewer challenges than those in competitive markets. And Singaporeans still love their newspapers. An SPH poll of 1,018 respondents aged 15 to 59, found 83 per cent of the nation's workforce prefer to use newspapers to find a job. In a sense, this market dominance presents SPH with a blank canvas, which makes its story all the more fascinating. Free of strong competitors taking its business, under-cutting ad rates or poaching staff, the company enjoys economic maturity in a region of emerging Asian markets. What could be more perfect? Chief executive Alan Chan admits his com- pany has a "strong grip" on the newspaper market -- led by the flagship, the Straits Times -- but SPH has not restricted itself to a cosy relationship with its readers and advertisers. Since taking over SPH in 2002, he has amassed a portfolio of over 100 magazines and quadrupled the revenue to over $S90 million. The company has created bilingual products, rolled out a tabloid newspaper to tap into the island's love of British soccer, forged a pan-Asia digital partnership with a Norwegian publisher and set itself on a social strategy to improve readers' Chinese and English language skills. "This social element is very important to us," says Mr Chan. "Our country's language is English -- this is what we teach in schools and use at work -- but we have our Asian herit- age. Our community's fear is that our children are not learning Chinese, Malay or Tamil. We have thus a social mission to make a contribu- tion to promoting bilingual skills." My Paper is the company's major contribu- tion to this challenge. It's free and circulates more than 250,000 copies -- that's one copy for every six citizens. "It is targeted at Singaporean Chinese who have a rudimentary knowledge of the language. "While the English language is of a normal standard, we write Chinese in a simple way. We cover hard news in English but sports and entertainment in Chinese." Mr Chan says the paper is bilingual because "this was the licensing condition the govern- ment would give us for a newspaper". The company's magazine strategy taps into readers' desire for sophisitcated content, too. Icon is a Chinese magazine with high pro- duction values that has been created for the nation's elite and distributed through a con- trolled circulation strategy. Yet this is not a crusade for the Chinese language. "I have to give the advertisers the demography they require," he continues. "In this instance, the magazine is read largely by sophisticated ladies, including some who are not proficient in Chinese. As a result, it has become a major vehicle for fashion. "Our biggest challenge is to get readers under the age of 30," says Mr Chan. "Other publish- ers around the world face the same challenge. We have spent a lot of money on newspapers in education. We have four student papers in English and Chinese that are tacked on to the main newspaper when it is delivered to schools. Two are targeted at Primary Schools, and two at Secondary Schools." Singapore is one of the few countries to mandate the reading of newspapers in schools. Each week, every student must spend one hour reading a paper, and there are prescribed lessons in which teachers will highlight issues raised by journalists and discuss how they are treated editorially. "We have responded to this by investing money in reading corners in schools and uni- versities," Mr Chan continues. "We hope to inculcate newspapers and a sense of reading in future generations of Singaporeans." The degree of difficulty is significant. Young Singaporeans love their technology. Together with South Koreans and Japanese, they have been among the world's earliest adopters, embracing SMS and multi-media messaging faster than western nations. The Singapore Government's repeated five-year plans for technology and adoption were often completed before the deadline as the country embraced what it calls the "KBE" -- Knowledge-Based Economy. Mr Chan can have a wry smile as newspa- pers in Australia and New Zealand, plus those based in America and the UK, twist and turn in their anxiety about charging for online journalism. The Straits Times has been charging since 2004. Award-winning sites, such as STOMP and Straits Times Razor TV, have been created to reach young Singaporeans by providing interaction on contemporary issues that are of concern to their strata of society. In doing so, the digital editors attempt to link the commu- nity back to the print newspaper. At the beginning of this year, the company boasted that its four biggest sites -- straitstimes. com, AsiaOne, Stomp and RazorTV -- achieved total page views of a record 80 million from 5.2 million unique users. Razor TV is based on a similar site created by the Scandinavian publisher, Schibsted, which has formed a partnership with SPH to launch digital properties across South-East Asia. This joint venture has already created web properties for the markets of Malaysia, Indo- nesia and the Philippines. Mr Chan is pragmatic about why digital is the preferred strategy for other parts of Asia. "There is much less restriction on digital busi- ness in these countries. If you wanted to print a newspaper, then we would have to apply for a licence," he says. A venture with Schibsted for online clas- sifieds in Indonesia is an investment that Mr Chan cites as a particularly exciting. "The numbers are very encouraging for these ven- tures, but most of the projects are still under water. We are taking the five to 10-year view. This is how Schibsted started its online busi- ness in Europe and we are starting the same way in Asia." The Schibsted chief executive, Kjell Aamot, once said that "to stay in the tradi- tional newspaper business was to put our- selves on death row". Since making the momentous decision to di- versify 10 years ago, Schibsted now produces more than 50 per cent of revenues and profits from the digital arena, and it has invested in similar online businesses in South America. By contrast, its free newspaper strategy across Europe has suffered badly and a number of titles have had to close. Mr Chan says Schibsted has provided es- sential benchmarks for measuring the progress of a digital property. "They are able to bring technology and business experience of what they did right and what they did wrong," he continues. "Our markets are different but many prin- ciples are the same. The key question is how you monetise websites. We need to build the number of eyeballs before we start charging money. If you do not do that, then you under- mine the business model." A new front is opening up in the digital sphere -- the iPad, tablet and e-reader. "It is going to be a brutal battle," Mr Chan predicts. "Even now there are lots of difficulties in get- ting content into the different platforms, and we are going to need to invest more money." In this area of the business, SPH is not without competitors. Mr Chan says most Sin- gaporeans spend the majority of their online experience on overseas websites. And he sees Google as a powerful competitor which can serve targeted advertising to his audience. With a stable of papers, digital properties and radio stations under its banner, SPH is preparing for new ventures. It has established a debt program with the capacity to raise up to S$1 billion by selling notes -- which are similar to bonds -- to investors. It raised S$600 million through an issue being managed by the bank, OCBC. Mr Chan told shareholders he wanted to "pursue opportuni- ties in real estate" as a way of hedging against the ebb and flows of the media business. The company owns Paragon, a top shopping mall in Orchard Road, developed a residential property called Sky@Eleven, and last No- vember it bought Clementi Mall for S$541.9 million with partners NTUC FairPrice and NTUC Income. "I see myself as the conductor of an orches- tra," Mr Chan muses, "and every section has their important part to play". Alan Chan, CEO of Singapore Press Holdings, tells MARK HOLLANDS about his company's expansion and diversification 20 | The PANPA Bulletin | MAY 2010 www.panpa.org.au Alan Chan, CEO of SPH ... "I see myself as the conductor of an orchestra, and every section has their important part to play" It is going to be a brutal battle. Even now there are lots of difficulties in getting content into the different platforms, and we are going to need to invest more money" " Our biggest challenge is to get readers under the age of 30. Other publishers around the world face the same challenge" "