20 Sep 2004

Back to Square One

Singapore media firms roll back competition

SINGAPORE: The republic's two dominant media companies are rolling back a four-year, government-led experiment in competition that cost them over S$200mil, returning to separate near monopolies in newspapers and TV.

Singapore Press Holdings Ltd (SPH), the city-state's biggest publisher, said yesterday it would buy nearly half of a rival newspaper run by state television firm MediaCorp, while the latter would acquire most of SPH's TV assets.

"This swap will mean a return to monopolistic power for SPH," said Stephanie Wong, analyst with Kim Eng Research.

State-linked SPH, whose 14 newspapers include the Straits Times, will pay S$19.2mil for 40% of Today, a free newspaper run by MediaCorp Press. MediaCorp will keep the remaining 60%.

In addition, SPH will pay S$10mil to merge its TV operations into a new company with MediaCorp's mass market channels. MediaCorp, which already runs most of Singapore's TV and radio stations, will hold a controlling 80% interest in the new company and SPH the balance 20%.

Singapore tried to open up its tightly controlled media sector in 2000 by allowing limited competition, with MediaCorp venturing into newspapers and Singapore Press going into broadcasting. The experiment foundered.

Today chalked up losses of S$28mil in its first two years of operations and unspecified losses in the last fiscal year, though the group has said the newspaper should break even this year.

The broadcasting venture by SPH, which includes the government as a small shareholder, also has performed dismally.

SPH has accumulated broadcasting losses of about S$180mil since launching its two free-to-air channels in 2000. Analysts said it had been lobbying for a return to pre-liberalisation days.

SPH shares were up 2.3% in a falling market at S$4.52 before a trading halt ahead of the announcement. The counter finally closed the day at S$4.76. The stock also rose on Thursday after Reuters published details of the deal, obtained from industry sources.

"It is a good deal. The TV channels are still bleeding S$40mil a year," said Wong of Kim Eng.

SPH's free tabloid, Streats, would be merged with rival Today, the management of which would be independent from SPH in an arrangement that analysts said would maintain a semblance of newspaper competition in Singapore.

MediaCorp was being advised by Credit Suisse First Boston.

The end of this experiment is not the first failed attempt at introducing media competition to the island of four million people.

In the 1980s, the government encouraged local banks to start a newspaper, the Singapore Monitor, to compete with the SPH's flagship Straits Times. The venture did not get off the ground until SPH was told to close its tabloid,the New Nation, and give its business to the Singapore Monitor. But after afew years of losses, the Singapore Monitor was shut in 1986. - Reuters

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