Channel News Asia reported that more Singaporeans are turning to television as recession woes bite. TV viewership numbers for news and variety channels have gone up as the full impact of recession sinks in.

We observed that during 2001 to 2004, competition from TV depressed printed ad rates by channeling advertising from newspapers to TV. Newspaper advertising revenue has started to gain ground since the consolidation of TV operators at the end of 2004. In our opinion, the increasing viewership could means we are seeing the trend of 2001 to 2004 repeating, where printed as are slipping against TV ad.

Quite evident in SPH's situation today, which is pretty in line with the weakening economy. Circulation volume is the culprit, falling 2% yoy. Classified ad revenue fell 17% yoy while display ad revenue fell 4% yoy (as indicated in its 1Q09 result). The saving grace was actually SPH's ability to wield its "monopolistic" power, as circulation revenue rose marginally due to newsstand price hike.

That said, we think SPH is likely to continue paying out a large portion of its recurring earnings as dividends. We have a Buy rating for the stock with a price target of S$3.77.