New Sky TV boss Martin Stewart hints that his company should never have lost the 2019 Rugby World Cup to Spark, and needs to repair relationships with NZ Rugby and other content partners as it looks to re-establish itself as "the home of sport."

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The ex-pat Brit has kind words for Spark's first foray into sports streaming with the Melbourne Grand Prix.

"Fair play to Spark, they've got a beta site up and running and it looks good in a short space of time - well done," he says.

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But his assessment of Sky's own sports streaming app, Fan Pass, is blunt.

"The problem is that we've got 12 channels and our affiliate partners on Sky Sport. We put four onto Fanpass.

"Then we say, 'You can only have it on two devices.'

"Then we say, 'You can't cast it to a big screen.' (A feature blocked on the cheaper mobile version of Fan Pass.)

"And if all that hasn't been enough to put you off buying it, we make it $99 [a month]."

Stewart promises a Fan Pass app with more attractive pricing, the ability to stream content to big screen TV and a lot more content, soon - though four weeks into his tenure, he won't be pinned down on an exact timeline (update: Sky has now slashed Fan Pass pricing).

And while he's at it, the entertainment-focused Neon app and Sky TV on Demand will get substantially more content, too, Stewart says. And he wants the apps on as many platforms as possible, from Apple TV to Xbox.

He says his company has world-class sports and entertainment content, it's just that it's not utilising it online.

There were suggestions that Stewart's predecessor, John Fellet, purposefully knee-capped Fanpass, and other apps and online services in the Sky stable, for fear of cannibalising Sky's shrinking but higher-margin traditional satellite business.

"I'm looking at the balance of investment and this time I want to see us do a lot more on the streaming side of the business," Stewart says.

Sky subscriber numbers rose year after year to a peak in 2015 before falling away as new online competition proliferated.
Sky subscriber numbers rose year after year to a peak in 2015 before falling away as new online competition proliferated.

"We have to put more effort into that streaming side and how we utilise what we've got. So I'm focussed on that for now and we'll let the other side rumble on for now. New generation decoder boxes take a long time.

"I want the team focussed on how we do much more, much more quickly on the streaming side."

Rugby World Cup loss hurts

There have been two high-profile departures during Stewart's first month in charge: director of sport Richard Last, whose abrupt exit was leaked to the Herald, and CFO Jason Hollingworth, who headed to a job at Vector.

Did Last walk the plank for losing the Rugby World Cup?

"We have to adapt and evolve for the next period of time. A lot of the team have been with the company a long time, and sometimes you need a bit of a change of direction, a bit of a refresh," Stewart replies, talking around the question.

The Herald tries another tack: would Stewart have preferred Sky to have kept the World Cup?

"I would, yes. I would. It's the World Cup of Rugby Union and the home of the All Blacks," he says.

"I can't second-guess history - but I'm determined that Sky Sport will be seen as the home of sport. And that means retaining and building on the key rights that we have - not letting them go.

"It's a question of understanding the brand promise that you're trying to live up to. So if we are the home of sports, that means retaining sports rights. In that case, [the World Cup], it's about doing what you have to do."

Would NZ Rugby be classed as a content partner?

"Yes, very much. And they should be a very strong partner."

He adds, "We've got to remember that our content partners are partners and we've got to work with them in a mutually beneficial way - which we used to, and we can again."

Catalogue of challenges

Sky TV's problems have been well-catalogued, from Netflix's challenge for its entertainment audience to Spark's sports insurgency to the search for a 'plan B' after the ComCom nixed its merger with Vodafone NZ, the rise of live-sports piracy, declining subs, falling average revenue per user and a sagging share price.

Stewart seems set to grasp the nettle with streaming (although he's wary of details at this early stage, and cautions contacts will have to favourable for apps to spread to more platforms.

But otherwise, things are still at the assessment stage.

In 2015, Sky TV shares touched $7. But its stock has since sagged over the Netflix threat, the failure of its Vodafone NZ merge, the Spark Sport insurgency, falling subs and disappearing dividends.
In 2015, Sky TV shares touched $7. But its stock has since sagged over the Netflix threat, the failure of its Vodafone NZ merge, the Spark Sport insurgency, falling subs and disappearing dividends.

The previous Sky TV regime promised an Android-powered "puck" that would receive all of its channel and on-demand content via broadband - and said it would be with us during February just gone.

A decoder upgrade was also promised for satellite customers, and an all-app, all-ondemand service by the end of the year for the online crowd.

Stewart is holding off a revised timeline and product timeline until he's got the lay of the land.

He says it will be completed soon. He's already talked to nearly all of Sky's 1100 staff, all of its major content partners and - via a three and a half week holiday tour of New Zealand after he arrived in the country on January 20 - everyday viewers.

The new focus on streaming implies a leaner organisation.

After all, streaming is a meaner, lower-margin business than linear TV. Even streaming king Netflix leans on its traditional DVD rental unit for profit most quarters and is staggering under a US$10b debt load. Disney lost US$580m on Netflix rival Hulu last year.

Stewart won't be drawn on any possible changes to headcount, but for the short term at least, he indicates there won't be anything as wrenching as the process underway at marketing partner Vodafone NZ, where another new CEO, Jason Paris, is making his mark.

Style shift

Already, there are signs of a difference in style.

Stewart meets the Herald at Sky's well-appointed sales office in upmarket Newmarket. His predecessor, John Fellet (who remains on Sky's board), always favoured the pay TV broadcaster's earthier main office in light-industrial Mt Wellington, where no shareholders' money was wasted on TVNZ-style neon lighting or, in some areas, new carpet.

Fellet favoured formal attire. Stewart is casually dressed.

And while Sky's previous top trio tended to be defensive about the company's satellite business, and at times seemed to be starving the wobbly Sky Go streaming effort, Stewart says he's looking ahead.

"I do tend to be a streamer," he says. He maintains he watches most of his content on an iPad, though does look to the big screen for news or a game featuring his favoured Premier League side (Chelsea).

How will Spark fare with the Rugby World Cup?

"I have no idea how they will do. I personally think it's more likely than not to be a success, because if I were them I'd spend whatever it takes," Stewart says.

"But I think the question they'll be asked after all the dust settles is, 'Was it worth it?'

"So it's not just a question of 'Will it be a success?', it's a question of money." (Spark has so far refused to detail any World Cup or Spark Sport costs. It ways it will do so at its first post-World Cup financial report, expected mid-February).

Stewart declines to be videoed, but is an easy and open communicator and seems ready to use his licence as an outsider and newcomer to abandon some of Sky's past thinking.

Just how much, we'll find out in the weeks ahead.

Forsyth Barr rates Sky TV "underperform," with a 12-month target of $1.55, while Milford Asset Management Portfolio Manager Sam Trethewey recently dismissed it as a "sunset business."

Shares [NZX:SKT] were recently trading at $1.36.

Who is Martin Stewart?

UK-born Martin Stewart came to Sky TV from his role as chief executive at OSN, a pay TV network in the Middle East.

He was chief financial officer at BSkyB in the UK between 1998 and 2004 when the media firm doubled its subscriber base.

And in 2009 to 2010 he led the successful turnaround of Ono, a leading telecom operator in Spain, which is now part of Vodafone.

"I'm looking at the balance of investment and this time I want to see us do a lot more on the streaming side of the business," Stewart says. Photo / Doug Sherring.

Stewart's sports credentials include being CFO of the Football Association (FA) for a six-month stint in 2016, serving on the Board of the London Organising Committee for the Olympic and Paralympic Games for seven years and playing a key role in successful Premier League and UEFA broadcast renewals on behalf of BSkyB.