Sky chief executive John Fellet is stepping down later this year.

Fellet has been with the company for 27 years, joining in 1991 as its chief operating officer before taking on the chief executive role in January 2001.

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"When I started we had 125 employees and three channels," Fellet said.

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"I am immensely proud of the work of our team, which now numbers over 1100 staff, in growing Sky to the company it is today."

Fellet said the pay-TV firm had a number of developments underway to capitalise on new digital opportunities, and he was looking forward to working with his team to find the best person to take over.

The decision had been made to tell the board early to allow it to start the hunt for a new chief executive Fellet said.

Chairman Peter Macourt said the company would undertake a global search as well as considering New Zealand and internal candidates.

"John will be part of that search process, and has agreed to remain as CEO until his successor is found," Macourt said.

"[He] will continue to serve on the Sky Board after the transition is made."

Macourt said Fellet had been the driving force behind Sky's success for many years and had made an enormous contribution to the business and New Zealand's television industry.

"We are grateful for his work and commitment to Sky, and for the succession process he has instigated, which will allow a careful search for the right individual to take the reins at Sky."

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Jeremy Sullivan, an investment adviser at Hamilton Hindin Greene, said he thought the market would be pleased the company was looking for a new chief executive and that the process was being managed in an orderly way.

"He has been with the company for a long time. It is possibly a bit overdue."

Sullivan said he expected Sky's share price to have a moderate lift on the news.

He said the new chief executive would need experience in transformation and change management as well as a big focus on digital.

He said they may look to poach someone from another company which had done well in transforming itself.

"I think they will need to look either internally or offshore. There is a relatively limited talent pool in New Zealand."

Mark Fowler, an investment adviser with Hobson Wealth, said Sky's move to find a new chief executive was positive as there was a general feeling that under Fellet, the company had been slow to move in terms of technology changing.

Sky CEO John Fellet has been with the company for 27 years. Photo/Dean Purcell.
Sky CEO John Fellet has been with the company for 27 years. Photo/Dean Purcell.

He expected the share price to bounce slightly at the news but said it also left uncertainty as the company had yet to announce a replacement.

Fowler said the new chief executive would need to have a digital technology background and would likely come from outside of New Zealand.

"I think they are more likely to look offshore, they may have some internal candidates, but the market is looking for someone with a fresh pair of eyes."

During his time in charge, Fellet has helped the company get back in the black, and dealt with the growing threat from streaming video-on-demand services such as Netflix and Lightbox.

In the 2017 year, Sky lost 37,000 subscribers. Fellet earlier told the Herald it was a challenging time, but said he could remember worse.

"As far as nights I've tossed and turned in bed, there were many more in 2000 than there are now," he said.

"The first year I took over, we were losing $44 million a year, and now in just the last six months we've made $66.7 million."

The company's shares last traded at $2.32, and have dropped 39 per cent in the past year.

Shares dropped two cents to $2.30 in early trading.