Washington Post and Singapore Press Holdings

Amazon founder Jeff Bezos recently bought the Washington Post from the Washington Post Company for US$250 million ($317 million). That’s less than the $365.5 million net profit reported by Singapore Press Holdings (SPH) for its 2012 financial year, which ended in August last year.

Even the US$250 million paid by Bezos was considered generous since the Washington Post Company’s newspaper division’s losses more than doubled from US$21 million to US$53 million last year and the flood of red ink continued this year, when it posted a loss of US$49.3 million in the first six months.

Singapore Press Holdings net profits
Singapore Press Holdings net profits
Singapore Press Holdings net profits (Source: SPH annual reports)

SPH has also seen its profits drop. The $365.5 million it made in 2012 was its lowest since 2002, dropping from the $388.6 million net profit it earned  in 2011, $497.9 million in 2010, $421.9 million in 2009, $437.4 million in 2008 and $499.1 million in 2007.

Still, the SPH profit drop is nothing compared with the Post’s predicament. The Post, which published the Pentagon Papers in 1971 exposing secrets about the Vietnam war and forced the resignation of President Nixon in 1974, is losing readers to online rivals like Politico and The Huffington Post.

SPH newspapers have been losing readers, too, but the decline apparently is negligible. SPH chairman Lee Boon Yang said in the 2012 annual report: “In our core newspaper business, circulation of our newspapers averaged 978,000 copies per day, a slight year-on-year decline of 3,400 copies or 0.3 per cent.”

Secret of success

So Sumiko Tan, Andy Ho, Rohit Brijnath & Co writing for The Straits Times have been holding on to their readers better than George Will, Charles Krauthammer, Eugene Robinson, EJ Dionne, Dana Milbank, the 2013 Pulitzer-winning art critic Philip Kennicott and others writing for the Post. The Post still has a larger circulation than The Straits Times (average weekday circulation: 389,700, as of August 2012), but has suffered a precipitous drop from 673,180 in 2008 to 474,767 in March this year, according to Atlantic.com.

What makes SPH so successful? This is something not only Bezos may want to know as the new owner of the Post but also Arthur Ochs Sulzberger, Jr at the New York Times.

“The New York Times Company swung to a profit in the second quarter”, reported the Times earlier this month, adding that “that net income rose to $20.1 million, or 13 cents a share, from a loss of $87.6 million, or 58 cents a share, in the period a year earlier”.

A net income of US$20.1 million? That’s peanuts compared with SPH, which reported a net profit of $187.5 million in its third quarter, which ended on May 31 this year.

Eat your heart out, Sulzberger.  You may have Paul Krugman, Maureen Dowd, Thomas Friedman, Gail Collins writing for you at the Times, but they can’t make as many bucks for you as the scribes and marketing folks do for SPH.

Some will, of course, say it’s a one-horse race. SPH is a monopoly. MediaCorp launched Today as a competitor in 2000, but SPH bought a stake in it in 2004.

Singapore media war

Singaporeans will recall the brief period when there was competition in the media. MediaCorp launched a newspaper, SPH launched broadcasting channels to compete with MediaCorp. But, under a September 2004 agreement , SPH merged its television operations with MediaCorp and acquired a stake in Today.

An SPH press release said at the time, on 17 September 2004:

MediaCorp and SPH view the rationalisation as a win-win solution for both parties. It comes at a time when both MediaCorp and SPH have incurred continuing losses in their respective mass-market TV and free newspaper businesses. Competition since media liberalisation in May 2000 has raised TV production and acquisition costs. It has also led to steep discounting. The two groups have therefore reached a commercial deal to stem these losses.

So how badly was the SPH bottom line bitten in the heat of competition? It reported a net profit of $340.8 million in 2001, $307 million in 2002, $378.7 million in 2003 and a whopping $546.3 million in 2004 following the sale of assets including the old Times House site at the junction of Kim Seng Road and River Valley Road.

So SPH was making hundreds of millions of dollars even in competition with MediaCorp. But it may be no coincidence that its net profits were lowest in 2001 and 2002 during the media war.