SPH has officially transferred its media business to the non-profit entity, SPH Media Trust, on 1 Dec 2021. That marks the end of the commercialisation phase of newspapers and printed media in Singapore.
The older investors would recall how SPH used to be a popular blue chip stock that gave out good dividends. It was also a near-monopoly business in Singapore. Today, it is a shadow of its former self.
SPH was incorporated in 4 Aug 1984 with the aim to merge a group of indie newspaper agencies and became dominant in the media space in Singapore. The only true rival was the former versions of Mediacorp (SBC).
They were competing fiercely in the early 2000s when SPH got the license to air TV channels and Mediacorp launched a free newspaper, Today. The competition didn’t last long as the Singapore market was too small to fight for. So they revert back to their core businesses – TV Channels were sold to Mediacorp and SPH took a stake in Today. They remained competitors in radio though.
The rise of the internet was a threat to traditional media globally, not just SPH.
We also saw the rise of internet entrepreneurs who took a pie of the advertising business from the newspapers.
Companies like SGCarMart, PropertyGuru and JobsCentral, ripped apart the Straits Times’ classified ads. For those who do not know, classified ads was the go-to for people looking for cars, houses and jobs in pre-internet era.
The drop in the main paper ad revenue was probably the nail in the coffin for SPH. They were taken away by big tech such as Google and Facebook. Digital advertising has more advantages – bigger reach, higher engagement, better ability to target and availability of analytics.
Advertisers flocked online.
It became worse as more ways and platforms to advertise online emerged. Even SPH had to post their news online to get readership.
Disruption happens gradually and suddenly. SPH started seeing revenue decline in 2012. But it was not until 9 years later that it was declared commercially unviable.
As investors who pick individual stocks, we have to constantly evaluate our investments.
Buy-and-forget can only work for funds because either the index algorithm or the fund manager will make the adjustments for us. What was a solid investment when we buy them may not be remain so in the future. And this is does not solely apply to traditional business. Even a disruptive company today, can be disrupted by new players in the future.
The average lifespan of a company in S&P 500 was 32 years in 1965.
It dropped to 21 years in 2020.
It will probably get shorter.
But don’t be fooled by the average.
We could possibly see a company staying in S&P 500 for just 1 year. That just means that the time horizons for long term investing has been shortened too.
The game is getting harder. The effort required has increased. The volatility of heartache became more pronounced.
Stock investing is a financial Squid game.
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