Pay TV company Sky is on the hunt for a new chief executive, after John Fellet announced his plan to step down this year - a move analysts say has been expected.

Shares in the company fell as much as 4.3 per cent following the news today, before eventually closing down 5c, or 2.16 per cent, at $2.27.

Fellet joined Sky as its chief operating officer in 1991 before taking on the chief executive role in 2001.

"He has been with the company for a long time. It is possibly a bit overdue," said Hamilton Hindin Greene investment adviser Jeremy Sullivan.


The head of equities at JBWere, Rickey Ward, also said Fellet's departure had been on the cards, with increasing pressure and competition in recent times.

"There had been much speculation for some time that John would look to retire," Ward said.

"The prospects of a merger with Vodafone NZ merely sparked talk that this was an imminent step towards retirement; that transaction was part of his exit strategy."

Ward said the timing of Fellet's announcement, following the Commerce Commission's decision to reject the merger, should not have been a surprise.

"It felt like it was always on the cards. Speculation, though, increased in recent times, competitive pressure and developing structural changes led some to suggest he might wish to move on."

In a presentation to investors today, Sky said it was moving to provide more on-demand services as it worked to retain its sports rights and stabilise core earnings.

The company said it planned to introduce upgraded set-top boxes with on-demand functions and the ability to support higher-quality content, along with internet-only set-top boxes which delivered content via fibre, instead of by satellite.

John Fellet

• Joined Sky TV as COO in 1991
• Appointed CEO in 2001
• Raised in Arizona
• Married with children
• Has a BA in accounting
• Has more than 36 years experience in the pay TV industry

As well as adapting to changing technology, Sky also faces the challenge of holding onto the rugby rights in New Zealand, which have been a key weapon in attracting and holding onto subscribers.

The contract for the rights is due to be renegotiated in the coming months, with Sky today describing this as strategically important, although it said there was "nothing to gain" by discussing its plans in public.

When Fellet joined the company it was losing about $44 million a year, compared with the most recent six months when it made a profit of $66.7m.

Recent times have had their challenges, however. The launch of a number of streaming video on demand (SVOD) services including Netflix, Lightbox, and Amazon Prime has introduced significant competition into the media landscape.

Nielsen research shows Netflix has moved from the early adopters into the mainstream, with the service now available in 434,000 households and reaching as many as 1.2 million Kiwis throughout the country.

At its last half-year result, Sky had 780,000 subscribers, having lost 37,000 in the 2017 year.

Last month Sky announced a new pricing plan aimed at stemming those losses.

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 adapt to changing technology.

He said the new chief executive would need to have a digital technology background and would probably come from outside New Zealand, adding that the market was looking for someone with a fresh pair of eyes.

Sky chair Peter Macourt said the company was looking globally but also considering local and internal candidates for the role.

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

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

Macourt credited Fellet with being the driving force behind the company's success for many years, saying he had made an enormous contribution to the television industry in New Zealand.

Ward also credited Fellet's work.

"From my perspective John is synonymous with Sky TV, seeing them through development, growth and into the entity it has become today," he said.

"He has always been a steady hand, and an unbelievable negotiator but perhaps time has caught up on him."

Ward said the departure would be a concern for many, given there isn't a clear succession plan.