Price hike
Street sales hit
Public furore felt in market. Newspaper vendors report street sales down but partly offset by rise in home delivery. By Seah Chiang Nee
Jan 27, 2004

The first newspaper price hike in nine years - by between 16 to 33 per cent - has been greeted by a public outcry among cost-sensitive Singaporeans that has revisited the monopoly issue.

The furore is directed at the Singapore Press Holding's (SPH) sudden increase of seven of its nine newspapers, with the major ones rising from 60 to 80 cents at the outlets.

However, the subscription price for the majority of readers is 70 cents, a lesser increase of 16-1/2 per cent.

The impact is already being felt at the market.

At least 80 per cent of morning papers are home delivered and their sales remain largely stable. It's obvious the company wants to drive people to subscribe to, rather than buy, newspapers.

The SPH has given out no statistics. Neither has its papers reported on the impact of their own story.

But street sales of its two biggest newspapers, The Straits Times and the Chinese language, Lianhe Zaobao, are reportedly hit the hardest.

On the first Sunday of the increase, one vendor at a hawker centre told me turnover was down by about 25 per cent. "After awhile, sales will recover. I've gone through this before," he added.

Others reported a 15-20 per cent decline.

One chat-site reader reported: "Last Sunday, at one of the HDB provision shops I visited, I saw there were huge stack of unsold Sunday Times," he said.

"The Indian shopkeeper told me that the number of unsold papers unprecedented. At a nearby Chinese provision shop, too, I saw a huge stack of Chinese newspapers."

But as days went on, the decline appeared to have stopped and even recovered slightly, according to some vendors.

One said the retail drop should now be around 12-15%, but he said subscription had increased without giving details.

Despite their monopoly for years, many middle-class housing estate homes surprisingly have not subscribed to morning newspapers.

"In this estate," one long-time vendor told me, "there's no delivery to some 40% homes." Asked why, he said: "Maybe because many professionals start work early, come home late, so they read them in the office."

Irate readers have bombarded the Internet and radio forums with critical comments. Some said they had stopped buying; others suggested a boycott. Most of them described it is unjustified.

Their complaint was that the increase was because of losses but due to the media giant wanting to improve on profits, which had jumped 23 per cent last year to S$378 million.

(SPH explained this included a one-time gain of S$188 million from the partial sale of its MobileOne mobile phone stake.)

The critics also say it is to partly offset losing ventures into television and a free newspaper, Streat. Operating broadcasting losses in the latest quarter rose from $6.3 million (2002) to $10 million.

The timing is bad because Singaporeans are still reeling from weak earnings and record-high (5.9 per cent) unemployment.

The strong reaction has come as a surprise to many people.

It also shows the depth of public feeling against newspaper monopoly and government control. Singaporeans believe the rise would have been cleared with the government.

Hence some of the complaints are directed at the government at a time when it is working hard to improve public confidence.

The Straits Times did not improve sentiments when it ran six readers' letters supporting the hike which was counter to the general critical mood.

The President of Consumers Association of Singapore (CASE), Mr. Yeo Guat Kwang, said he had received "numerous complaints" from retail buyers about being charged so much more at outlets.

He urged SPH to reconsider its decision and suggested that consumers turn to other sources of information, including online newspapers, freesheets, TV and radio.

In response SPH chief executive officer Alan Chan said SPH had not raised prices since 1995 and has held off increases through difficult economic conditions since the 1997 Asian crisis.

It had held off even as prices of most consumer items went up - bus fares by 40 per cent, taxi fares (50 per cent), white bread (47 per cent) and a cup of coffee (40 per cent).

"Despite concerted efforts to contain costs, our newspaper production costs have gone up significantly," said Chan, without giving details. "We can no longer continue to fully absorb the rising cost."

Newspaper profits in Singapore have come purely from advertisement. The cost of producing a newspaper, including newsprint, is roughly twice its retail price.

Readers are therefore 'subsidised' by advertisers but competition has been rising from TV and radio as well as two large circulation free tabloids, TODAY and Streats.

The price hike has revisited the controversy of (virtual) newspaper monopoly and government media control.

"Competition provides for better standards and ensures there's no profiteering," is a common argument that is resurfacing.

Whenever a monopoly raises prices, fairly or not, it enters the realm of politics. With the SPH it is no exception.

On its side, the newspaper giant sees a lot of uncertainty on the horizon. Its advertising margin will continue to come under pressure. That could well mean more price hikes in future.

Ironically, all this is benefitting eyeball counts on its own website.

AsiaOne, one of Asia's most widely visited online media sites, carried most of its newspapers and can be read without charge.

SPH will probably be watching the print sales closely. If the declines become a permanent feature, it will probably act to plug this hole.

Insiders say plans are afoot to start charging online readers when it happens. Or maybe even before that.
By Seah Chiang Nee