SPH ties up with Norway group - Sep 14, 2006 (BT)

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The Straits Times / The Business Times News On SPH

SPH ties up with Norway group

Partners set up 2 online joint ventures in region.

By Wong Wei Kong
Sep 14, 2006
The Business Times

SINGAPORE Press Holdings (SPH) and listed Norwegian media group Schibsted ASA yesterday announced a strategic partnership to develop online ventures in the region.

The partnership will see SPH and Schibsted - cited by The Economist in its Aug 24 issue as a rare example of a newspaper group that has succeeded in the Internet - set up a regional joint-venture company and a Singapore joint-venture company. Both companies will make an initial investment of over $2 million each to set up the ventures.

It's a deal: Mr Chan (left) with Mr Aamot yesterday. The Schibsted group is the only newspaper in the world to have turned online operations into a profitable business, says Mr Chan

The regional joint-venture company, 701Search Pte Ltd, will identify potential investments in online classifieds, search and directories across South-east Asia and Greater China. It will be held 50-50 by SPH and Schibsted.

The Singapore joint-venture company, SPH Search Pte Ltd, will focus on areas such as online search and directories in Singapore. SPH Search will be held 75-25 by SPH and Schibsted.

'The two joint-venture companies will benefit from Schibsted's unique technologies and capabilities in the online business as well as SPH's expertise as a leading content provider and its understanding of and network in the Asian markets,' they said in a joint statement.

SPH chief executive Alan Chan said the partnership is part of the group's quest to grow beyond print and beyond Singapore. 'We envisage that with growing Internet penetration, we will be able to secure opportunities to increase online advertising revenue,' Mr Chan said.

Listed on the Oslo Stock Exchange, Schibsted has used its established newspaper brands to build websites that rank first and second in Scandinavia.

It has also created new Internet businesses such as Sesam, a search engine that competes with Google, and FINN, a portal for classified advertising. As a result, 2005 was the company's best ever for revenues and profits. Online operations contributed 10.4 per cent of Schibsted's revenues of 11.3 billion Norwegian kroners (S$2.9 billion) in 2005, and 23 per cent of operating profit of 1.4 billion kroners.

SPH management teams visited Schibsted twice over the last two years before sealing a partnership with the company, Mr Chan revealed. 'The Schibsted group is the only newspaper in the world to have turned online into a profitable business,' he said.

The agreement with SPH represents Schibsted's first move into Asia, said Kjell Aamot, CEO of Schibsted. 'Schibsted has good experience in working with local partners when entering into new markets and we are very satisfied with having reached these agreements with SPH.'

Schibsted's breakthrough online did not come easily, Mr Aamot noted. 'We lost a lot of money in the dotcom boom. We lost money after the dotcom collapse. We broke even as late as 2002.'

Mr Chan said SPH will be 'sufficiently patient'. The transaction is not expected to have any material impact on SPH's earnings for the financial year ending Aug 31, 2007. Willie Cheng, a director of SPH, will also be a director of the two joint venture companies.