Tuesday, 31 October 2017
MEDIA CONTENT EVERYWHERE BUT WHERE'S THE REVENUE?
In my mail shot yesterday, I had referred to Free Malaysia Today's article "Why job cuts at Singapore media giant are a good sign"
In its article, Free Malaysia Today had referred to an the publication ASEAN Today as one of its sources, so I took a look at ASEAN Today which I found to provide very much more comprehensive information with graphs and charts as to why Singapore Press Holdings is retrenching its journalists despite recording 'surging' profits.
Basically, its media unit is the only unit to experience declining revenue, whilst revenue of its property unit increased.
ASEAN Today posed a rather ironic question for the future of media in its sub-heading - "SPH – Singapore Press Holdings or Singapore Property Holdings?"
On 14 September 2014, ASEAN Today wrote:-
(Please enable view images if you cannot see the embedded graphs below)
With the onslaught of new media, Singapore Press Holdings is losing its relevance, and it may be time for them to consider privatisation.
By Joelyn Chan
Along with other media companies, Singapore Press Holdings (SPH) struggles to stay relevant and maintain its profitability.
Alan Chan, CEO of SPH, said: “We have done a comprehensive business review to strengthen our position in a tough economic and media environment. Market conditions will remain difficult with the continuing disruption of the media industry.”
“We will continue to innovate and invest in our media products to stay ahead and relevant. At the same time, we will grow our business adjacencies to diversify revenue streams and maximise stakeholder value,” he added.
SPH’s lacklustre performance
Compared to 2015, SPH’s operating revenue shrank by 4.5% to SG$1,124.3 million. In the last four years, the media business’ contribution to total revenue has fallen by 8%. The fall in revenue can be explained by a 7.6% decline in the media business. Revenue from property increased by 4.6%. The declining composition of its core media business is likely to persist, and SPH is falling back on real estate to sustain their shrinking business operations. This trend also reflects on the sustainability of the traditional media industry in Singapore and Association of Southeast Asian Nations (ASEAN). Competition is now global and digital.
SPH’s lacklustre performance has warranted cost reduction measures and improvements in operational efficiency amidst continuing uncertainty. In 2001, SPH AsiaOne had downsized, retrenched 23 employees, and restructured its businesses to focus on online news, careers and database services. SPH’s broadcasting arm, SPH MediaWorks trimmed away 19% of workforce and announced an across-the-board salary cut of 12.7%. In 2003, SPH once again retrenched about 3% of its total headcount.
Since 2014, its biggest expense – staff cost, has achieved the desired year on year decrease. However, mere cost reduction of SG$12 million over two years cannot save SPH, which needs greater revenue and profits.
SPH’s service offerings lack competitiveness
The Straits Times(ST) may have held its position as the best-read publication in Singapore, with a total readership of 1.26 million. But SPH’s newspaper readership remains on an accelerating downtrend, faring worse today than ten years ago.
Lower readership has a knock-on effect on advertising rates. Outshining SPH, Google and Facebook are forerunners in the emerging digital advertising industry with an estimated 65% share in 2015’s revenue. For instance, Facebook Audience Network allows media buyers to publicise external website and applications on its advertising network.
This year, SPH has erected metered-paywalls for its content. Paywalls will work for Business Times’s specialised content, but not for generic news where sources are ample.
Free news sites like South China Morning Post (SCMP) and Channel News Asia dilutes ST’s effort to generate subscription revenue. Again, competition is international and digital. Barriers to entry to reporting are lowering. Millennials go to social media for quick news breaks. Assuming they want deeper insights, young adults know how to use techniques such as Chrome’s incognito and applications such as Newsify to bypass paywalls.
In the Radio and Television entertainment sector, SPH’s three radio stations are losing popularity to Spotify while SPH is divesting its 20% stake in Mediacorp TV. Spotify has two billion playlists available across 60 countries, allowing its 100 million users to select from a wide variety of music anytime. The hay days of radio are over. Radio’s commercial value will diminish, albeit it will remain a core information transmission service for public service purposes.
To revive its fate, SPH has entered into a joint venture with Mediacorp to launch a new digital advertising marketplace. Dubbed Singapore Media Exchange, it may be a remedy to SPH’s woes in 2018. SPH has also incorporated Fastco Pte Ltd for development of interactive digital media software. Should these plans succeed, SPH’s financial report may see a U-turn in performance.
SPH – Singapore Press Holdings or Singapore Property Holdings?
Ironically, the Property segment is SPH’s key driver of growth. Its retail properties enjoy 100% tenancy and generate pre-tax profit margins that are double of the Media business. Future plans include a proposed condo project and retail mall in the highly coveted Bidadari Estate. But smarter shareholders may question whether SPH’s property segment is part of its core business. Could they not simply divest SPH and invest in other REITs or property stocks?
“Having a substantial part of our assets in the form of property does provide a buffer from the declining fortunes in the media business…In fact, SPH plans to make more strategic property investments and will continue to focus on the retail sector,” Chairman Lee Boon Yang replied in response to a shareholder’s musing on how SPH is morphing into a property investment company.
The future of SPH
SPH’s highest share price of SG$4.15 in 2016 fell below 2011’s share price of SG$4.26. After the announcement of its divestment in Medicorp entities, SPH’s share price closed at SG$2.76. SPH struggles to attract capital from investors with its blurry outlook and business proposition. Will the smart money buy into SPH’s strategy – using real estate to prop up its diminishing business?
SPH’s current circumstances bear similarities to pre-privatisation SMRT Corporation – weak profitability, sustaining on rental income, and high investment outflows. SMRT Corporation has since been delisted by Temasek Holdings to focus entirely on serving the public. The same fate is unlikely for SPH as its current top shareholders are Citibank and DBS nominees.
Apart from restructuring further, SPH can still hope for an acquisition like SCMP and The Washington Post (WP).
In 2016, Alibaba Investment Limited bought over Hong Kong’s leading English paper, SCMP, along with the Armada Holdings Limited’s other media business. Following the US$266 million sales, SCMP removed its paywall. SCMP editor, Tammy Tan, said: “ SCMP’s website doubled its number of unique users in the first year after the pay wall lift. Last month [August 2017], the site received nearly seven million unique view.” The current readership has achieved a significant improvement from its initial count of 350,000.
Similarly, Amazon CEO Jeff Bezos bought WP for US$250 million in 2013 and fueled a 58.1 million increase in unique US Digital visitors within three years. The fresh injection of funds and new leadership helped the two over-100-year-old media giants to reinvent their offerings in the dynamic media landscape.
Traditional press has no future. Be it restructuring, privatisation or acquisition, SPH needs to try harder to outshine the new media disruptors. It may want to rethink its strategy to build resilience for core media business by diversifying into education, healthcare or property. By spreading itself too thin, it risks losing focus on its consumers’ needs.
Now moving on to the ASEAN Today article referred to by Free Malaysia Today.
The kicker here comes at the last sub heading at the bottom - "AI is now sufficiently advanced to write articles"
"The decision from SPH to cut back on journalists is a leap towards the new era of journalism. It demonstrates a company pro-actively responding to consumer needs and modernising to catapult itself to the head of the pack. In the hyper-competitive world of news reporting, a failure to innovate is a death sentence. The SPH message is clear, it wants to keep Singapore at the forefront of modern journalism, and that means reducing jobs and embracing technology."
The second ASEAN Today article basically says that in order for Singapore Press Holdings to "leap towards the new era of journalism", it will have to retrench its human journalists and increase its reliance on computers information technology.
This is a clear message to any school leaver intending to pursue a career in journalism that they can find themselves obsolete and out of a job perhaps earlier than their 40s and also that journalism will no longer be a viable paying career upon which one can rely upon for a decent living income.
Job cuts at SPH reflect the changing face of journalism
Singapore Press Holdings (SPH) announced substantial job cuts. However, these cuts are an indication of future success, not turmoil.
By Oliver Ward
Journalists at SPH fear for their jobs after the news corporation announced its intention to axe 230 staff members. The job cull will involve 130 redundancies, reducing staffs in the core media divisions by 15%.
SPH reported a surge in profits for 2017. The group recorded a net profit for the fiscal year of S$350.1 million (US$256.9 million). Rather than a signal of financial distress, the SPH cutbacks are an indication of modernisation and progression.
To stay relevant and profitable, SPH needs to keep up with consumer trends and create stimulating content for the new generation. To do this, it needs to embrace AI solutions.
The way we consume news is changing
News consumers have made the transition to online platforms. 85% of the population now use online news sources, and there is fierce competition to stand out in a saturated online news market.
With so many established players in the online news market, news outlets are hyper-targeting audiences with attractive clickbait titles. The changing shape of the media has allowed for the emergence of new AI technologies to specifically target audiences.
Lars Eidnes, a 29-year-old web developer, analysed more than two million online articles and made the website Click-O-Tron. Click-O-Tron uses a formula to create clickbait titles. While it is a joke site, with headlines like “John McCain Speaks in His Own Words” and “How the World’s Most Extreme Baby Moms Lost Weight”, it is an insight into the media of the future. Why use journalists to generate catchy headlines for their articles when a programme can offer a perfectly engineered algorithmic headline designed to target your audiences?
Long essay-type articles are a dying breed
The bulk of the population now consumes their news through smartphones. This platform does not lend itself to long essay-type articles.
The rise of the smartphone has changed the way we communicate. The new generation communicates with visuals. The number of images sent across social media per day rocketed from two billion in 2015 to 3.25 billion in 2016. Visual journalism is becoming the new norm.
SPH and other media outlets do not need as many journalists
This also means there is less need for actual journalists. AI can maximise output for visual content. Programmes like Wibbitz analyse a text and produce voice over accompanied videos and graphics. The graphic also analyses data and produces visual graphics in seconds. The use of software like these mean media outlets can reduce their staff numbers and create strong content in line with rising consumer trends.
SPH is taking steps towards producing more visual articles. In 2016, SPH invested S$ 6.8 million (US$ 5 million) in Brand New Media Singapore (BNMS). BNMS is a leading video content production company. Its past productions won at the Asian Television Awards.
Julian Tan, Head of the Digital Division at SPH said, “consumption of online videos has seen a steady rise in Singapore”, adding, “SPH’s strategic investment into BNMS comes at an opportune time as we strive to complement and enhance our video storytelling capabilities.”
Other companies are looking to transition to stay ahead of the industry and increase revenues. Media outlets are forging connections with television companies to produce more visual contents and allow for more crossovers. NBCUniversal has made investments in Vox and Buzzfeed as has Time Warner in Mashable.
These relationships have worked both ways, the news companies with a large online presence are offering marketing opportunities to younger audiences for the television networks.
There are other opportunities to incorporate technology to improve productivity
There are other technologies and platforms available to significantly boost journalists’ productivity and output. Grammarly, for example, is a plugin and desktop application that runs an accurate spelling, grammar and plagiarism checker anywhere you write online.
Full Fact also announced in June 2017 that it would launch two fact-checking platforms in 2018. The software will store a database of fact-checked claims and be able to monitor subtitles from politicians’ speeches in real-time and fact-check their claims. When released, the platform will significantly decrease the time editors spend fact-checking articles and help in the fight against the proliferation of fake news.
Even on the design front, there is software to facilitate artistic decisions. Analytical Visual Assessment (AVA) is a software platform that can select images to accompany an article that will resonate more with target audiences.
AI is now sufficiently advanced to write articles
The future of journalism is quickly advancing. Using natural language generation (NLG) technology, the technology behind Apple’s Siri and Amazon’s Alexa, AI bots can produce concisely written articles. Human input will only be required to select relevant data sets. The bots can then analyse the data and write up the findings. The Associated Press is already using the software to generate stories about corporate financial quarterly earnings.
Kris Hammond, co-founder of Narrative Science estimated that computers would be responsible for 90% of news contents by the mid-2020s.
The decision from SPH to cut back on journalists is a leap towards the new era of journalism. It demonstrates a company pro-actively responding to consumer needs and modernising to catapult itself to the head of the pack. In the hyper-competitive world of news reporting, a failure to innovate is a death sentence. The SPH message is clear, it wants to keep Singapore at the forefront of modern journalism, and that means reducing jobs and embracing technology.
On 21 September 2017, Bloomberg Technology reported:-
Singapore Press Considering Job Cuts in Reorganization Plan
Abhishek Vishnoi 21 September 2017, 18:41 GMT+8 Singapore Press Holdings Ltd., which started a review of its media business last year, is considering job cuts amid a reorganization, according to people familiar with the matter.
The city’s dominant newspaper publisher, like many of its peers in the industry, is grappling with digital disruption that has eroded readership and advertising revenue. While Singapore Press has diversified into property, telecommunications and nursing homes, that has failed to arrest a slide in earnings. Profits have fallen for six straight quarters, including a 45 percent decline in the three months through May from a year earlier.
Chin Soo Fang, a spokeswoman for the newspaper publisher, said she declined to comment on market rumors.
Singapore Press had 4,473 employees at the end of May, with a total wage bill of S$276 million ($204 million). Revenue in the third quarter slipped 11 percent to S$260 million. Its media business was the only segment that reported a decline in sales as advertising shrank. The planned cuts come less than a month after Chief Executive Officer Ng Yat Chung was appointed Sept. 1. Mediacorp, the country’s other main news group that publishes the Today newspaper, said in August it would stop the print edition.
Singapore Press’s market value fell below that of its U.S. peer New York Times Co. for the first time in 12 years earlier this month. Trading near levels last seen during the 1997 Asian currency meltdown and the 2008-2009 Global Financial Crisis, Singapore Press shares are the year’s worst performers on the country’s benchmark index, down more than 20 percent.
— With assistance by Andrea Tan, and Divya Balji
Whilst that may sound like a broken record, the key point for these retrenchments in media is the same - i.e. falling revenue and profitability.
Based upon the experience of newspapers in the United States, for every US$8 to US$10 drop in print adversing revenue, their online advertising revenue has rising by a mere US$1which is clearly unsustainable for most newspapers and magazines with print, online and digital editions, as well as those with online only or online and digital editions.
This is thanks or no thanks to competition for online advertising from global Internet giants such as Google and Facebook, as the infographic of US newspaper advertising revenue shows below.
The growth in penetration of broadband Internet, whether fibre or wireless, sounds the death knell of media, whether in the United States, Singapore, Malaysia and many other countries where such penetration is high, since this enables competition for advertising revenue from the like of Google, Facebook and others.
It also enables competition from news sources elsewhere, especially those with journalists reporting first band from the ground where the event or incident happened or is happening, rather than having to rely upon second, third, fourth, fifth and so forth hand reporting by media in one's country.
A ray of hope?
However, there could be a ray of hope coming to light especially for print media, TV and radio in recent reports that some major advertisers in the US are cutting or withdrawing their digital ad spending because they have found that it yields little or no return on investment in terms of sales generated.
This is provided advertisers return to advertising in traditional media and whatever readers. viewers or listeners may remain.
Otherwise, the future for media organisations and journalism as a viable paying career will remain bleak, especially if advertising revenue for online or digital media remains low.
Perhaps journalists in today's media had better be prepared to clean toilets for a living, like some university graduates in Malaysia are doing, instead of relying on mummy and daddy to sustain them.
Meanwhile "Singapore Property Holdings" might well rise to new heights.