Sky has appointed Sophie Moloney as its new CEO following Martin Stewart’s surprise exit after less than 2 years at the helm. Mark Jennings looks at the implications for the pay TV network.

Martin Stewart swept into New Zealand and the Sky TV CEO role bursting with energy and charisma. The contrast with his predecessor, the laconic John Fellet was marked.

The ebullient Englishman wore jeans and black turtlenecks. Fellet was rarely seen out of a suit and tie in his 28 years with the company.

Stewart actively courted the media. Fellet, while accessible, didn’t look for attention.

Fellet had 12 direct reports. No doubt it slowed down the decision making, but he liked to hear a wide range of views before he resolutely embarked on a course of action.

Stewart waved goodbye to 10 of those reports and set about speedily reinventing the company which had dominated the local TV industry before wilting under the withering fire of international and local streaming services.

And now, suddenly, he’s gone.

Sky Chair, Philip Bowman, a strong supporter of Stewart, said in a media release on Tuesday:

“Since joining Sky in February 2019, Martin has led a successful turnaround and the Board acknowledges his significant contribution.”

Bowman can’t be referring to Sky’s share price when he talks about a turnaround. Since Stewart took over in February 2019 it has been on a steady downward spiral, falling from around $1 to 16 cents currently.

The low share price has been a source of frustration for Stewart who has argued that it is undervalued by some margin. From the time of his arrival, Stewart bemoaned the market’s treatment of Sky and told Newsroom: “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?”

Interestingly, two weeks ago Stewart spent $25,000 buying 150,000 Sky shares to go with the 1,436,000 he already owns.

It is hard to say if Sky’s rock bottom share price (it has been as low as 10 cents in recent times) played a role in Stewart’s sudden departure – but it can’t have been a positive for him.

So, what did he “turnaround”? The company’s image would be near the top of the list. When Stewart took over at Sky the word “despised” could’ve gone close to describing its brand.

In that early interview with Newsroom Stewart nominated brand redemption as one of his first jobs.

“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.”

Today, two years on, Sky might not be “loved” but it has certainly moved into neutral or positive territory under Stewart. He has worked hard with many of the sporting codes to improve relationships. He has also made good progress on video streaming services and cut the price of products to match the market. Attacks from competing media lessened as Stewart forged alliances and partnerships with the big players. Under the shadow of Covid-19, he slimmed down staffing and costs to align with the decline in market share.

His $40 million purchase of Dublin based streaming service, Rugby Pass, may or may not turn out to be a good move. The disruption to world rugby has made it hard to assess.

Stewart probably rues his decision to scrap the development of a new My Sky box.

Back in early 2019, Sky was probably within 3 months of launching a new box that would have been capable of hooking up to the internet and streaming services like Netflix, Amazon Prime etc. Newsroom understands that at the time Netflix and Amazon were prepared to pay for access to Sky customers.

Stewart killed off the idea along with the internal development team, proclaiming the age of the set top box had passed.

A relatively recent change of heart saw him reactivate the plans for a new generation box but the device won’t be ready for at least another 12 months. His initial decision cost Sky three years.

Stewart’s surprise departure could be unsettling for investors, but Sky’s board has been quick to install a replacement.

Bowman said it had “accelerated the company’s succession planning process,” and appointed Sophie Moloney as CEO, “effectively immediately.”

Moloney, who worked with Stewart in the Middle East before coming back to New Zealand, has been a rising star at Sky.

In less than three years she has gone from legal counsel to Chief Commercial Officer and now, Chief Executive.

Sky insiders describe her as “very bright” and “very competent.” Under Fellet, Moloney led Sky’s campaign against piracy and illegal streaming.

Her ascent to the top job comes at a pivotal time for Sky. Next year the company will launch its own broadband product and Stewart previously indicated that a move into mobile phones would be a logical follow-on. It is likely Sky will ‘bundle’ broadband with its other subscription services, but it is going to be tough going as a reseller of a commodity product in a market with close to 50 competitors.

Moloney’s negotiating skills will also get an early test when she takes over the talks with New Zealand Rugby aimed at reducing the costs of the rights deal done by Stewart.

The deal kicks in next year and, without a full schedule of top-class rugby, will hurt Sky’s bottom line. NZR will have to give Sky a break but it, too, desperately needs the cash.

Stewart had to hold onto the rugby as a Spark win would have killed Sky Sport, but it is no secret that Brent Impey (NZR Chair) and Steve Tew (ex-NZR CEO) bent him over a barrel.

Moloney’s job now is to somehow extract maximum value from the biggest sports rights deal in the country’s history.

Mark Jennings is co-editor of Newsroom.

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