Martin Stewart is looking for love. “Kiwis love flying, beer and chocolate,” he says referring to the brand strength of Air New Zealand, Speight’s and Whittaker’s. Kiwis might also love Netflix, but they sure don’t love New Zealand’s own pay-TV company and Stewart knows it.
“Sky should be a loved brand … It’s brought high levels of production and service to the screen but somewhere along the way the relationship (with customers) started to get broken or damaged. We stopped listening or even when we did listen, we didn’t take action.”
Stewart is taking action. The first thing he is reported to have said to his executive team when he arrived here from his last job at a pay-TV company in Dubai was: “Who was responsible for losing us the Rugby World Cup?”
Two long-serving executives have since departed, although the decision not to outbid Spark, which won the rights to this year’s RWC in Japan, would have rested with the former chief executive, John Fellet.
It’s clear that Stewart would have paid a higher price for those rights. “I’d like to have it. We are still the home of sport and it’s about meeting the brand promise.”
Asked if he disagreed with his predecessor that the cost of sports rights can reach “ridiculous heights” and paying the price might not be in shareholders’ best interests, Stewart replied: “Ridiculous is a fudgeable point. Spark (might see it) as a relatively small sum for a marketing campaign.”
Spark, of course, does see the RWC rights as a key part of its strategy to establish itself as a provider of premium sports content. It also competes with Sky and Netflix with its entertainment platform, Lightbox.
Apart from the major sports bodies rubbing their hands with glee at the prospect of some future bidding wars between Spark and Sky, what else can we expect from Stewart now that he is ensconced in Sky’s Mt Wellington headquarters?
For a start, Sky’s digital products will get a lot more focus. The streaming app Fan Pass is in for a major overhaul. He is signalling more content and better value.
“We have been trying to drive people to the living room to sit round the big screen and you can’t do that. You have got to go to where the customer is and adapt to what the customer wants to do.”
“I’m going to change the name, the price, what’s in it, and what you can do with it. These are all relatively simple things for us to do,” he said.
“We can change this in a couple of weeks and go out with a phenomenal digital product that actually delivers on the promise of any screen on any device, anywhere, anytime … as long as you’re not afraid of customers taking that and not something else.”
What Stewart is alluding to is Sky’s long-held fear of cannibalisation. If customers replace a more expensive Sky product with a cheaper one, then revenue takes a dive. The new CEO says the company has little choice.
“I think we have to face facts; the facts are that for the last three years, our business has been getting smaller. The value of our business is getting smaller.
“It is easier for me, being unencumbered by the past, to come in and say that’s not working, let’s do something different.
“We have been trying to drive people to the living room to sit round the big screen and you can’t do that. You have got to go to where the customer is and adapt to what the customer wants to do.”
Stewart seems more at home with the idea that the future of Sky lies with streaming its products on the internet than John Fellet did. Sky is overdue to release a new “my sky” box into the market, and John Fellet was clearly pained by having to announce a further delay before leaving the company. Stewart seems unbothered. “I’m focused on the future side of the business.”
“Sky Sport is still seen as the home of sport, people want us to be successful.”
Sky presentation of sport and its sports programmes look to be in for a shake-up too.
“I can revamp the presentation of it (sport), the on-air look and feel, how we flip between the main screen and the social media platforms, how we augment it with free-to-air, there is so much more that we haven’t done.
“I think sports news is an area we can do more in. I think that is a market segment that we can serve better.”
Another thing Stewart says the company has not done well is get full value from its sports rights on social media.
“I have social media platforms. Do we put the clips I have the rights for on social media? No. Why? I have no idea.”
Big changes also appear to be on the way for Prime – Sky’s free-to-air network.
Sky bought Prime in 2005 for $30 million so it had a free-to-air outlet for All Blacks test matches and not be held over a barrel by TVNZ and MediaWorks, which wanted to cut the cost of what it was paying Sky for games of national importance.
Prime has always lost money and its general programming has never been able to compete against TVNZ and MediaWorks, despite plenty of branding and marketing campaigns over the years.
It has a dedicated following among a small group of older viewers and offers some quality shows, but remains a minor player in an over-serviced free-to-air market.
Selling or shutting Prime down had to be an option for a new CEO. Instead, Stewart is talking up his plan for the channel.
“It is a very interesting asset. We are going to change its brand and positioning and look at playing more sports – a complete relaunch.”
Stewart is doing what most “transformational” CEOs do. He has given himself a couple of months to assess things, rejuvenate his executive team, come up with a new plan and is now on a charm offensive with the media.
He says shares in the company are undervalued.
“Our multiple (price to earnings) means we are valued at less of a growth stock than NZME (owner of the NZ Herald and Newstalk ZB). I don’t want to cast aspersions on our newspaper colleagues but how can that possibly be right?
“Sky Sport is still seen as the home of sport, people want us to be successful. Over the last 30 years we’ve pumped over a billion dollars into Kiwi sports codes. What persuaded me to take the job is all the assets Sky has, but what I would have done differently is what I am going to do now and that’s to make the most of what we have got. On a sports and entertainment level there are no businesses in the world that have a better line up.”
