Sky TV will remain the 'home of sport', new boss Martin Stewart vows

Thursday, 21 March 2019

Sky TV chief executive Martin Stewart toured the country without revealing his job, to get Kiwis' views on the company.

Sky Television's new boss Martin Stewart is promising more locally-produced shows such as sports documentaries and sports news as he seeks to revive the fortunes of the pay-TV giant.

Sky could also produce its own dramas and other television entertainment down the track, he says, but sports will be the initial focus.

'I am keen we deliver services that support the main heritage of Sky which for me is Sky Sport. I think it will continue to be the biggest pillar of our organisation.

'Sky was and needs to continue to be the 'home of sport' and that is it,' he says defiantly.

* Sky TV appoints 'transformational' chief executive

* Sky TV's great fall: From monopoly to a fight to the death**

A revamp of Sky's free-to-air channel Prime is on the cards for this winter, with hints that will also put sport more front and centre.

Stewart, a 55-year-old Briton who was previously running pay-TV company OSN in Dubai, was named as Sky's new boss in November and arrived in New Zealand in late January.

It takes a special kind of confidence to swap continents and take up of the invitation of trying to breathe confidence back into a corporation that has taken as much of a battering as Sky Television.

Perhaps the closest comparison is when Scotsman Paul Reynolds breezed into the country to head the then-unloved Telecom business 12 years ago to begin what proved a stormy five-year stint.

Like Reynolds, Stewart has Glaswegian heritage through his parents, though his accent is from Dorset and London where he was born and grew up.

Sky relies on expensive hardware such as Sky's D1 satellite, above, to get its programming to viewers.

He has an impressive resume, including as chief financial officer of Sky's British equivalent, BSkyB, between 1996 and 2004.

And like Reynolds he is being touted as a 'transformational' chief executive who could take the business to places that an old guard could or would not go.

Sky used the 'transformation' word four times in the media release originally announcing Stewart's appointment.

Insiders suggested at the time that was intended to send a clear signal that the company's board had decided to embark on a bolder strategy that would involve faster change.

But Stewart spent his first three weeks in New Zealand touring the country with his daughter and listening to the people he met, rather than getting his feet straight under the desk and prescribing solutions for the firm.

'I wasn't sure how much time I would have after I officially started and I wanted to have a good look at the country,' he explains.

Stewart said he asked a lot of people about Sky during his travels. 'I didn't tell them what job I was doing.'

'The good thing is pretty much everybody I met was either a customer or a former customer.'

Their views were not a surprise, he says. 'People would like more flexibility, more choice and they have a sense that maybe the value equation has got out of kilter.

'We have to try harder to demonstrate why we are premium service.'

That doesn't mean customers have got it wrong about the value Sky is providing, he clarifies.

'What I meant was we have to listen to the fact that if we want to carry on charging a premium price we have to do more to add value to the experience and the content and that is what we are focused on doing.'

Hence the focus on new productions. 'There will be changes on screen. People will see a richer, more immersive experience. They will see more support programming.'

Sky had already kicked off a few sport documentaries, he said. 'You will see them in a couple of months.'

Spark Sport got off the blocks on Sunday and threatens to eat into Sky TV's customer base.

'People are hungry for things like sports news. If we are going to look at 'news' it is going to be on the sports side rather than a general news service.

'We clearly have to appeal to younger audiences more if we are going to have the next 30 years of Sky. That means different presentational styles, the different use of statistics and graphics.

'That will be backed up by a commitment to get our content into the hands of Kiwis in any way that they want. We need to change and that shouldn't come as a surprise to anybody.'

The company plans to make it easier for people to watch Sky on more platforms, perhaps by allowing customers with internet-only access to put Sky on the big screen, Stewart says.

But it also plans to get its MySky boxes – which let people pause and record Sky – into the hands of more of its satellite customers.

'It has a fantastic set of features and we need to get that into people's hands more broadly,' he says.

Since Stewart was named as the company's boss, the headwinds facing Sky have grown only stronger.

The company's share price has fallen another 40 per cent in those four months, and Sky was last month forced to announce a 'disappointing' delay bringing to market a new generation of set-top boxes with Netflix-like features on which Stewart's predecessor, John Fellet, has been pinning great hopes.

Meanwhile, deep-pocketed Spark – which is now worth 12 times the value of Sky on the sharemarket – has launched its 'market-changing' Sky Sport service and made what appears to have been a decent fist of its major event, Sunday's Formula One Grand Prix in Melbourne .

On Sky's share-price hammering, Stewart says: 'The market has made a judgment on where they think the value of Sky is. I don't believe that is representative of the long-term value of Sky.

'I think we are pretty undervalued at the moment. But it is our job to demonstrate why we believe we are right.'

What can Sky do to ensure it remains the 'home of sport' if Spark boss Simon Moutter simply decides to write bigger and bigger cheques to win sports rights?

'I expect Spark shareholders will be very interested to understand the economics of what he is trying to do,' Stewart says. 'From our point of view I have said to our partners and our staff, that we are committed to retaining our premium sports and that is what we are going to do.'

Sky does have cards up its sleeve.

Its investment in satellite transmission means it is the only pay-TV service that can provide a truly hassle-free nationwide service, regardless of the quality of people's broadband.

It is still generating far more cash than any other New Zealand media businesses, putting it in a position to make acquisitions, which Stewart does not rule out.

There is a perhaps realisation among many consumers that competition in pay-TV can also mean bigger bills as they are forced to sign up to multiple providers to get all the programming they want.

And whether or not they would describe themselves as 'loyal', Sky's remaining base of 600,000-plus satellite-television customers may at least have a high degree of inertia, having stuck with the company through Netflix's Kiwi honeymoon.

What shareholders may be wondering, however, is whether 'transformation' will simply become a synonym for price-cutting, and whether Stewart has any big levers to pull to create a sense of forward momentum that don't involve giving customers 'more for less' by sacrificing profit margins.

Stewart says the challenges facing the company are 'perfectly surmountable'.

'The assets we have are extremely good. To use a sporting analogy we just have to play a slightly different formation.'