Wednesday, September 29, 2004

Larger issues in media merger 

In the wake of the merger of the mass-market television and free newspaper businesses of Singapore Press Holdings (SPH) and MediaCorp (see my earlier post), there have been plenty of grumblings about the loss off competition in the media industry and that therefore the merger is unjustified. Many of these grumblings come from people within the media industry, for whom the reduction in competition clearly represents a diminution of choice, whether that choice applies to employment, advertisement channel or source of entertainment or information. As their interests are being affected, it is perfectly understandable that these people should speak up to defend those interests.

What moved me to write on this issue again is Koh Buck Song’s article in The Straits Times today, which suggests that the merger neglects “larger issues”. Unfortunately, the larger issues referred to in the article — the credibility of the media — appear to be still limited to those pertaining to the media.

What seems to be forgotten is that Singapore is more than just the media industry. There is a wider economy and society to consider. To me, these are where the larger issues belong.

To consider “larger issues” is to confront the following questions:

  • When an entire industry sustains persistent losses, what is the implication to the wider economy in terms of wasted resources and potentially unmet demands in other sectors of the economy that are denied those resources?

  • When companies in an industry are perceived to suffer losses due to mismanagement and incorrect strategy, what is the role and responsibility of outsiders vis-à-vis those of management and shareholders in ensuring that the mistakes are corrected to stem those losses? Put in another way, where does private enterprise end and central planning begin?

  • If the losses cannot be reversed, what are the practicalities involved in forcing a company to continue operating under a loss? What happens when funds run out?

  • When an industry operates under persistent losses but benefits accrue to the country as a whole, who should bear the cost: company shareholders or taxpayers?

  • How do investors perceive a country’s business environment and react when obstacles are placed in front of companies attempting to make rational business decisions?

  • Even when considering the impact to the media industry itself, important questions still need to be asked. If the media companies are not allowed to merge but cannot stem the losses and one of them folds anyway, who would be the likely survivor? And what would be the impact to the rest of the industry and to the country if that company attains a complete monopoly of the industry?

    Looking at larger issues is fine. But let’s be clear what those issues are.


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