Will SPH's newspaper ad revenue see a pick up soon?

It has fallen 12.5% YoY in 3Q16.

The FY16 had been challenging for the Singapore Press Holdings (SPH) as its earnings were down 17.5% to $265.3 million. It would have been a good year for the group if not for the worsening declines in the ad market.

According to CIMB, SPH's newspaper ad revenue fell 12.5%, dragged by display ads which posted a 14.4% revenue contraction and classifieds which suffered an 8.6% decline.

The brokerage firm explained that some sectors might have to cut off on advertising spending given the slow pace of economic growth in Singapore.

"This was the steepest decline in FY16, as poor sentiment continued to weigh on adex (advertisement expenditure). The transport and telco sectors were the only two bright spots in 4Q, while property remained a dra," CIMB said.

With this, newspaper ad revenue is slated to fall further 10% in the next financial year.

DBS Group Research shared the same idea, saying the lacklustre economy of the city state could continue to put pressure on advertising spending.

"We trimmed our FY17F/18F earnings by 3.5%/ 4.5% as we expect adspend to contract further, mitigated partially by costs control," DBS stated.

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