SINGAPORE -- Shareholders of Singapore's dominant newspaper group on Friday approved a restructuring plan that entails spinning off the 176-year-old Straits Times and other media assets in one of the biggest industry shake-ups in the country's history.
With the approval, Singapore Press Holdings will split, with the media assets falling under the umbrella of a nonprofit entity and the company itself moving forward mostly as a property concern.
According to an announcement from SPH, 97.55% of the votes cast at Friday's virtual extraordinary general meeting favored the plan. The restructuring is expected to be completed by December.
SPH was formed in 1984 through a merger of three organizations. It dominates the local print media market with more than a dozen print publications, in English, Mandarin, Malay and Tamil.
Those businesses, however, have been waning. The media unit reported operating revenue of 193 million Singapore dollars ($140 million) for the six months through February, a 24% decline from a year earlier. Pretax profit dropped 71%, to SG$3.1 million.
"Running the media business under the current organization structure of the listed SPH entity is not feasible," SPH had said in a notice to shareholders. The notice went on to say that traditional print media is undergoing "unavoidable secular decline."
Most of the SG$97 million profit that SPH earned for the six months came from its property business. Analysts describe the Singapore Exchange-listed company as operating a "quality portfolio" of properties, including shopping malls, student accommodation and elderly care facilities.
SPH says the media spinoff will provide "greater flexibility" for the company as it will no longer be bound by the country's Newspaper and Printing Presses Act, which stipulates no one can become a substantial shareholder of a newspaper company without the minister's approval.
Indeed, SPH is already looking beyond the restructuring. As the second step, state-backed conglomerate Keppel Corp. intends to acquire and privatize SPH's remaining business, which will further unlock value for shareholders of the remaining company, SPH said.
The market appears to have been looking forward to the restructuring. SPH's share price has gained 70% year to date, by far outperforming the 9% growth of Singapore's benchmark Straits Times Index.
Now that the restructuring plan has been approved, attention will turn to how SPH's publications might change.
SPH Chairman Lee Boon Yang said in a statement on Friday that SPH's media now has "a solid foundation to create a new future for journalism in Singapore."
"I am confident that they will succeed in their mission to provide the best possible media service and content to their audience at home and abroad," he said.
SPH said the new nonprofit organization, which will be free of market pressure, will help maintain the publications' quality. SPH will provide SG$110 million in cash and shares to the media entity, and Singapore's government has indicated it will give funding support.
"It remains to be seen if the new outfit will be equal to the task, especially when the government will provide a significant source of public funding to it," Eugene Tan, associate professor of law at Singapore Management University, told Nikkei Asia.
SPH shares did not trade on Friday. Based on Thursday's closing price, SPH's market capitalization stands at about SG$3.1 billion.
Additional reporting by Dylan Loh