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SPH chief editor: if we don’t learn from the mistakes of others, we will fall off a cliff

A senior editor at Singapore Press Holdings, the publisher of the Straits Times, has said that the company must learn from the mistakes of publishers in markets such as the US and the UK if it is to avoid going over the “tipping point” of circulation and revenue decline.

The publisher’s editor-in-chief for English and Malay newspapers Patrick Daniel told Mumbrella at the World Association of Newspapers conference in Hong Kong yesterday that the reason his counterparts overseas “tipped over” is because “they didn’t do much about it”.

“If we do nothing, the tipping point will come – or we will find that we’re past it. But now we’ve had the experience [of decline], the challenge is what steps do we take,” he told Mumbrella.

The fortunes of SPH’s print assets fell again last year, with newspapers and magazine operating revenue slipping by 2.9 per cent.

“What are the learnings we can take from other markets, and can we stave off a steep slide? If we don’t learn from them, we deserve to fall off a cliff,” he said.

Daniel said that, on its current course, he expected that Singapore would reach the “tipping point” already seen in countries like Japan, the US and the UK in the next three-to-six years.

However, in his presentation to delegates at the WAN-IFRA event, he said that the company’s strategy was to “defend and expand” its core print and digital businesses.

SPH owns 19 newspapers, around 100 wholly-owned or licenced magazines, three radio stations, an internet TV channel, outdoor ad sites and a book publishing arm.

Daniel said that three quarters of the company’s revenues still come from newspapers, and the promise of new forms of revenue such as native advertising and fast growth in digital would help keep the company’s publishing operations growing.

“My CEO was telling me back in 1996 that the newspaper business is a sunset industry. I said what rubbish,” he said. “Print is not going to go away.”

“The bottom line is, we believe in defending and expanding our core print and digital business. SPH has invested US$165m in digital since 2005,” he said.

“News and journalism is not a dying business. Demand for news is still high. It’s not as if we’re making pizzas and people suddenly stop eating pizzas. The product we produce – news – is still in great demand.”

Daniel pointed to the Little India riots and the missing Malaysia Airlines jet as news events that had found big audiences for SPH off- and online in recent weeks.

“Whenever something big happens, papers fly off the shelves and digital goes through the roof. The demand is there. It’s unfortunate for us that the riots came to an end,” he joked.

(Patrick Daniel insists that he did not make the above comment about the Little India riots. But Mumbrella stands by its reporting and has been backed up by a third party who was in the room when Daniel said this.)

But Daniel conceded that SPH has what he called “a revenue problem”.

“Right now, digital ad revenues cannot support our cost base. If print revenues fall and there’s not enough digital revenue to take up the slack, then we have a problem,” he said.

“The issue is not that people want to stop reading our content, it’s because we don’t have the revenue to support it.”

“We must keep print alive and adopt a hybrid model,” he said. “We have to get away from thinking it’s print versus digital. It’s not. It’s print plus digital.”

“The Straits Times is such a powerful revenue generator. We’ve got to keep and protect that product,” he added, pointing out that the ST is an “efficient” media buy, because it has wide reach in the market. ST is one of Singapore’s only newspapers with national reach, and enjoys limited competition.

What worries the SPH editor-in-chief is a profit collapse for what is still one of the world’s most profitable publishers.

“I am standing on a slippery slope. We are now running at 30 per cent margin. My biggest fear is a 10 per cent margin,” he said.

A change is pricing strategy is one option to raise profitability, but price is risky territory in Singapore, Daniel said.

“We don’t have pricing power anymore in print, with so many free newspapers now in the market [the Straits Times’ main rival, MediaCorp’s TODAY newspaper, is a freesheet]. If we were to raise the cover prices of our newspapers it would be a big gamble.”

“But with our digital assets, there definitely is pricing power. We started charging for the Straits Times in 2004. At the time, people complained and said, do you think you’re better than the New York Times? I’d say, yes.”

Mobile services also offer “some pricing power” for SPH, he added.

Cosmopolitan magazine in the US charges more for its digital product than print, Daniel noted, because it offers a “brilliant” digital product. SPH should be able to do the same, he suggested.

“And Vogue has a great product and they can charge more [for digital]. We haven’t charged more for digital than print yet, but the day I hope will come when we can charge more.”

Digital growth had partly offset declines in print, but Daniel admitted that circulation revenues are “still lower than before”.

The company’s growth plan involves transitioning its news operations  into an “integrated multi-platform newsroom” delivered in “the formats that people want, and at lower cost” and a “phased transformation to integrated sales.”

“If we succeed in doing this, we can remain a high margin business,” Daniel said.

The SPH newsroom, he said, would be “two speed”; fast, to provide short, sharp updates, and slow, providing analysis and an “engaging experience.”

Analytics would be used to guide editorial decisions, and a content management system to enable real-time content sharing across titles.

He also hinted that SPH would look into a partnership with Google to shore up online advertising revenues.

“We haven’t teamed up with Google yet, but I’m thinking about. We don’t want to be left fishing at the bottom of the pond,” he said.

SPH, which is celebrating its thirtieth year since merging its English and Chinese language newspapers, sells around one million newspapers daily, and reaches 74 per cent of Singapore’s adult population over the age of 15, according to the publisher.

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