MCI Response to PQ on SPH Media Trust's Internal Review of Circulation Numbers for Publications

Parliament Sitting on 6 July 2023

QUESTION FOR ORAL ANSWER

2. Ms Jessica Tan Soon Neo: To ask the Minister for Communications and Information (a) whether he can provide an update on the SPH Media Trust committee’s review of overstated circulation numbers of its publications; and (b) what are the measures that SPH Media Trust and the Government will take to prevent similar incidents in the future.

3. Ms Tin Pei Ling: To ask the Minister for Communications and Information in respect of the SPH Media Holdings Board’s Audit and Risk Committee findings published on 16 June 2023 (a) what is the timeline for SPH Media Group to implement the recommendations; (b) whether the Ministry will impose additional obligations on the group to tighten accountability; and (c) whether all the overstated circulation figures and consequent financial impact have been corrected.

4. Mr Murali Pillai: To ask the Minister for Home Affairs with respect to SPH Media Group’s filing of a police report over overstated circulation figures of SPH news publications after potential offences were flagged in an investigation by its audit committee (a) whether the Police has classified the police report as one that discloses offences for investigation; (b) if so, what are the offences; and (c) how will the Police treat the key investigative findings by SPH Media Group’s audit committee, which include conclusions on the state of knowledge on the part of various SPH officers in relation to the inflated circulation numbers.

5. Mr Murali Pillai: To ask the Minister for Communications and Information in respect of the investigation report issued by SPH Media Group’s audit and risk committee on overstated circulation numbers of SPH news publications (a) whether the steps that have been recommended to be undertaken by SPH Media Group in the report are assessed to be adequate; (b) whether regulatory action is being considered; and (c) whether any new regulation is being contemplated to tighten reporting standards by media groups on circulation numbers and other key information to ensure accountability for the same.

6. Mr Zhulkarnain Abdul Rahim: To ask the Minister for Communications and Information in view of the findings and recommendations in the recent report by the Audit and Risk Committee of SPH Media Group, what are the lessons and safeguards that the Ministry will take on funding to SPH Media or other entities in the future.

7. Mr Yip Hon Weng: To ask the Minister for Communications and Information in view of the report released by the Audit and Risk Committee of SPH Media Holdings Pte Ltd (a) whether the Ministry still plans to continue its S$900 million funding support for SPH Media Trust over the next five years; and (b) how will the Ministry ensure that such monies are spent prudently with good accountability and oversight.

8. Mr Ang Wei Neng: To ask the Minister for Communications and Information (a) whether there is a need to set up a Committee of Inquiry to reveal the cause of Singapore Press Holdings (SPH)’s overstatement of its daily circulation numbers; (b) whether the Ministry will consider revealing to the public on the companies that are involved in assisting SPH to overstate the circulation numbers; and (c) what are the lessons learned to prevent such occurrences.

9. Mr Leong Mun Wai: To ask the Minister for Communications and Information (a) whether the Government's funding agreement with SPH Media Trust has been concluded and if any funds have been disbursed; (b) if so, whether these funds will be re-assessed in light of the report of the Audit and Risk Committee of SPH Media released on 16 June 2023; and (c) whether the key performance indicators for the funding agreement will include evaluations of SPH Media Trust's risk culture and improvements to its risk management practices and internal controls and processes.

Answer:

1. Madam Deputy Speaker, may I seek your permission to address questions 2 to 9 in today’s Order Paper? I will also address PQ 4822 filed for a future sitting.

2. Members have asked for updates on the SPH Media Trust’s (SMT) review of overstated circulation numbers, which covers the period of September 2020 to March 2022.

3. Madam, in the February 2023 Sitting of Parliament, Members had asked a range of questions on this matter. In response, I made three key points.

4. The first is that the events took place before SMT was formed, when the media business was under SPH Limited (SPHL), a privately-listed company.

5. The second point is that whatever happened had no bearing on public funds, because the Government did not have a funding relationship with SMT before the end of 2022.

6. For avoidance of doubt, the first tranche of funding was disbursed in March 2023. In other words, the events preceded the period of funding. No public funds had been involved. Correspondingly, the question of loss of public funds does not arise.

7. Third, I explained the Government’s reasons for funding SMT’s transformation, which had little to do with circulation.

8. Nevertheless, the Government made it clear then that it expected SMT to properly investigate the matter and to give the public a proper account.

9. SMT’s Audit & Risk Committee (ARC) has since concluded its investigations and its findings have been extensively reported.

10. My update to members will therefore focus on three areas, namely, the ARC’s findings;  what SMT will do to address the underlying issues; and what the Government will put in place to ensure public funding to SMT remains prudent and accountable.

    • Update on Investigations

11. Let me first deal with the ARC’s observations. As members will have read in media reports, there were three noteworthy findings.

    • i) First, the overstatement of circulation numbers amounted to around 82,600 average daily copies at August 2021. This is around 10% of overall circulation of their main titles. The ARC did not find any evidence of the involvement of the journalism and editorial departments.

    • ii) Second, the ARC found that the accounting impact was not deemed to be material to the financial statements of SPH Media Group for the financial year ending August 2022 taken as a whole. For the financial year ending August 2021, there was approximately S$110,000 in understatement of profits.

    • iii) Third, there were possible offences committed, based on several findings. Circulation numbers had been reported in a manner inconsistent with established standards, there was improper accounting of revenue, and there was a barter deal which was a possibly questionable arrangement entered into for the sole purpose of inflating circulation numbers. Consequently, the ARC has recommended that a Police report be filed and the Board has done so. To Mr Murali’s and Mr Ang’s questions on the specific offences being considered, I am unable to give further details as this is now an ongoing police investigation.

12. Ms Tin Pei Ling asked whether the overstated circulation figures and consequent financial impact have been corrected.

13. After SMT was formed in December 2021, it began internally reviewing the data it took over and rectified the inconsistencies detected. Its accounts since its first financial year ending August 2022 no longer have these inconsistencies. As for the period before SMT was formed, these findings have been made public and further actions to deal with the erroneous figures are matters to be decided by the relevant parties involved then.

14. Ms Hany Soh filed a related question for a future sitting. She asked if NLB had been a subscriber of SPH Media’s publications. The answer is yes. NLB’s subscription provides its members with access to various titles published by SPH Media. Neither the subscription rates nor members’ access are related to circulation numbers. There is therefore no impact of any kind.
    Addressing Underlying Issues

15. Members Ms Jessica Tan and Ms Tin asked how SMT will take up the ARC’s recommendations. SMT has shared with MCI that its follow-up is in three main areas.

16. One, they will benchmark their reporting to international standards. They are commissioning the World Association of Newspapers and News Publishers (WAN-IFRA) to review and advise on their methods for measuring the reach of various titles. These are the metrics that the public, businesses, and the Government will be concerned with, to know how many people come into contact with a title’s content.

17. Two, SMT will improve internal controls, including:

    • i) Tightening deal structure and pricing approval procedures, such as requirements for approvals at the appropriate levels;

    • ii) Strengthening guidelines and checks for revenue and cost recognition;

    • iii) Improving separation of duties among staff, to ensure data accuracy and accountability; and

    • iv)  Commissioning external parties to review its governance, control and compliance measures, with the aim of embedding the enhancements into a new enterprise resource planning system.

18. Three, SMT will enhance its risk management practices throughout the organisation and review its risk culture.

19. SMT has assured MCI that they will implement these measures immediately and will provide us with regular status updates on a half-yearly basis.

    • Funding Accountability and Safeguards

20. This leads me to the third set of questions members have asked: whether this affects the Government’s funding to SMT.

21. The Reuters Institute Digital News Report is published annually, and its 2023 edition released last month is a timely reminder why funding support for mainstream media remains necessary.

22. Even with dozens of news sources easily available, audiences in Singapore consistently turn to our mainstream media when they need something they can trust.

23. Specifically, trust levels in all the SMT’s major titles remained much higher than the global average. 73% of respondents expressed trust in The Straits Times, up three percentage points from last year. This is against the backdrop of the erosion of trust in news globally, from an already modest 42% last year to 40% this year.

24. Trusted news media made possible by quality journalism is a public good we cannot afford to compromise on. It is more important than ever when the environment is full of disinformation and sensationalised news.

25. However, SMT can only deliver quality journalism if they can continue to strengthen their capabilities and reach audiences in the digital age. Media consumption has moved online rapidly, disrupting the entire industry. In the same Report by Reuters Institute, the share of respondents who consume print news has dropped to 22%, from 53% just six years ago.

26. SMT must move decisively into the online space. But the new competencies take time to build, and the economics of news media in the digital era do not make it easy for newsrooms to survive, let alone fund new investments.

27. The costs of running a professional newsrooms remains high, and data and technology infrastructure require substantial upfront costs. Yet revenue streams are a fraction of what they were in the heyday of print media.

28. Advertising revenue has been squeezed, with a large share going to platforms run by Big Tech. Growing subscription revenue in a world of free news is also challenging – only 15% of Singapore readers surveyed by Reuters Institute are willing to pay for it.

29. The challenge is even more pronounced for vernacular publications, which have smaller readerships. Yet it is critical to preserve them. They are an essential part of our multicultural society and unique identity, and give voice to our ethnic communities.

30. The Government’s funding is ultimately to fulfil a public good – that of trusted news media enabled through quality journalism.

31. MCI is committed to working with SMT to overcome the challenges of disruption and succeed in its transformation. Therefore, to Mr Yip and Mr Leong’s questions, the Government will continue funding SMT at the amounts we committed to.

32. This does not, however, mean that we have no additional expectations of SMT in light of this incident. We acknowledge their seriousness in investigating the concerns and for making the findings public. As it is now a matter for the Police to consider, we should turn our focus to making sure SMT will discharge its public duties responsibly on an ongoing basis.

33. At a leadership level, the SMT management and board have demonstrated commitment to changing legacy practices. We expect SMT to persist in addressing internal weaknesses and systematically follow up on the required changes.

34. Members will recall that the circulation data issue emerged because SMT was conducting its own review and due diligence following the transfer of the media business from SPHL in December 2021. This point has often been overlooked. This whole set of findings arose out of SMT's own internal review, which no one, in particular, asked them to do. They themselves felt it was important to start on a clean slate.

35. SMT intends to follow up on the ARC’s recommendations to ensure organisation-wide accountability and bring the organisation forward.

36. We welcome the plans SMT has set in motion, including instituting internationally accepted benchmarks and extensively reviewing its governance and control measures. This is an ongoing process, and MCI will work closely with SMT to ensure these measures are implemented.

37. To Mr Murali’s question on reporting standards, the key point is to ensure reports are consistent with international best practice. It is in SMT’s own interest to uphold reporting standards, with or without regulation.

38. Ms Tin and Mr Zhulkarnain asked if we will impose additional safeguards, and Mr Leong asked if we will put in KPIs evaluating SMT’s improvements in risk management and controls. To assure Members, the funding agreement concluded in March already contains measures to ensure accountability, for example:

    • i) SMT is required to submit specific information on Key Performance Indicators (KPIs), including their methodologies and sources. These must be agreed upon and SMT is not allowed to change them without MCI’s consent.

    • ii)  SMT’s KPI performance and financial statements must also be audited by independent external auditors.

39. However, the evaluation of and improvements to internal processes are clearly the responsibility of SMT’s executive team.

40. The Government will intervene if there is a case of misconduct or mismanagement of public funding. In this regard, we have built in safeguards that allow the Government to conduct our own ad-hoc audits. If serious wrongdoings are found, we have the right to terminate funding.

41. MCI will also be reviewing the terms of the funding agreement, including the KPIs and funding quantum, at the mid-term juncture. SMT’s ability to address these management issues will be taken into consideration.

42. Madam, I have updated Members on what I can.  The outstanding matter of the police investigation should be allowed to take its course. At its conclusion, the follow-up actions will also be made public.