SINGAPORE (AFP) - Singapore's two biggest media groups announced a merger of their loss-making television and newspaper operations just four years after competition was introduced in the industry.
Top publisher Singapore Press Holdings Ltd. (SPH), whose foray into television has resulted in heavy losses, and broadcaster MediaCorp, whose sole newspaper is struggling to break even, called it a "win-win solution".
SPH and MediaCorp were both monopolies when they were given licences to compete in each other's turf in 2000 as part of media "liberalisation" in the tightly-controlled city-state but the rivalry quickly became cut-throat.
They poached staff from each other and heavy discounting of advertising rates led to financial losses for both sides.
The announcement of the "rationalisation" came as no surprise to insiders, who had had been saying for months that a shakeout was inevitable, particularly in the capital-intensive television business.
"There just isn't enough ad revenue to feed two TV companies," MediaCorp chief executive officer Ernest Wong said in a memo to staff seen by AFP.
At the same time, he said there was room for a second newspaper group due to larger advertising revenues in the print media.
Under the deal, SPH, publisher of a stable of profitable dailies led by the nearly 159-year-old Straits Times, will give up its two floundering television channels and a free tabloid.
A new company called MediaCorp TV Holdings will manage their joint television operations, with SPH taking a 20 percent stake and the rest of the equity held by MediaCorp.
SPH will also take a 40 percent stake in MediaCorp Press, publisher of the popular newspaper Today, which was set up to compete with the Straits Times and has pushed the boundaries of Singapore's conservative media culture.
SPH will merge its tabloid Streats with Today, leaving Singapore with only one newspaper distributed for free to readers.
Even before the merger, Today executives were confident they would start breaking even by next year after achieving a circulation of 300,000.
"It will operate independently of the stable of newspapers under SPH," a joint statement said.
An opposition leader, Chee Soon Juan, told AFP that "frankly speaking, there's not a lot of difference" with the two rivals now cooperating, adding that "essentially they are all mouthpieces of the government."
He said the government should open up the industry to an alternative newspaper and "let market forces determine which newspapers will thrive."
In their joint statement, MediaCorp and SPH said that competition since May 2000 "has raised TV production and acquisition costs" and led to "steep discounting," prompting them to reach a commercial deal to stem losses.
MediaCorp, owned by state investment agency Temasek Holdings, operates television, radio, Internet, wireless news, movie production and entertainment production units, in addition to the newspaper.
SPH, listed on the Singapore Exchange, is Southeast Asia's leading newspaper group, with 14 titles published in English, Chinese, Malay and Tamil. Its newspapers have a combined daily readership of 2.78 million, or two-third of Singapore's total population.
SPH shares closed 8.15 percent higher at 4.78 Singapore dollars (2.83 US) following the announcement.
Its chief executive officer Allan Chan said "the merger will bring rationality back into the TV and free newspaper markets, and should ultimately lead both businesses to flourish."
The Ministry of Information, Communication and the Arts said it had given approval in principle to the companies' effort to "eliminate mutually destructive competition" and enable them to expand overseas.
It said the government "continues to welcome local players entering the TV and/or newspaper market, if they meet the prevailing criteria for such licences."