Get out while you still can

Sky begs customers to stay with themIt would appear that Friday’s issuance of Sky’s annual report was the final straw for investors who have been bailing from the pay tv broadcaster ever since.

While the stock market took a 2% hammering yesterday, Sky’s contribution was double that as dreadful slide continued.

In a little over 12 months, CEO John Fellet has steered Sky Television to a 25% devaluation in the stock price so it is little surprise that an expected resignation announcement is forthcoming.

Sky have been plagued by poor management decisions which have led to endless problems in the delivery and deployment of their new digital strategies as well as problems securing content, leading to constant complaints by subscribers.

With the Rugby World Cup on the horizon, Sky will be desperate for a bump in subscribers but once that is over, there will be very little carrot left to convince them to stick around.

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About the author

Regan is one of the co-founders of Throng Media.
If they're on, I'm usually watching Game of Thrones, The Walking Dead, 24, Battlestar Galactica, The X Factor, Survivor, House of Cards, Mad Men and the NRL.
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  • benpaul12

    Sky is heading into the abyss that so many other companies are going through – keeping up with changing technology.

    What’s compounding this for Sky (as opposed to MediaWorks) is that their staple, and reason to keep paying customers, is the issue with sport coverage. It’s already pretty bad now, as all they have continuous coverage of is NRL and Union.

    Doesn’t the current NZRU coverage contract finish in 2016? If they can’t get exclusivity again, they’re finished.

    • Mike

      Sky’s rugby deal was renewed and will conclude at the end of the 5 year contract commencing 2016. ie you’re thinking that Sky is finished in 2021.

      I’d be interested to see if Spark will reach into their pockets when the Premier League rights come up for renewal next year. I doubt that PLP has made terribly much money out of streaming (prices were hiked 33% this year although no additional content was made available) and if you’re of the opinion that loss of the EPL rights was a factor regarding subscriber decline then wont Sky be back bidding again?

      The most important aspect for any media company continues to be reach – and monetising that reach. Fledging players that have to wear the startup costs to build reach will find out if their model has merits only in the course of time.

      • Jas

        The other problem they have with reach is they have to support so many platforms and models but unlike overseas providers they don’t have the same number of customers to wear the cost.

  • AW

    Hate to rain on your parade but the reduction in Sky’s share price has nothing to do with management. The company is well run , very profitable and transitioning like the rest of the world to media convergance. Take a look at the balance sheet and the profit!
    Yesterday was ‘black monday ‘ on the NZ & global stock exchanges (NZX down 143 points) add to that recent downgrades to media stocks worldwide. Sorry Benpaul12 but Mediaworks is in much more trouble; their advertising/linear model is shrinking faster than the Fox Glacier. It’s about content and the advertising model can’t provide the $$$ to buy content either local or international. A diversified subscription model like Sky is way more sustainable. Netflix’s impact on Sky churn has been minimal (1-2%). So as much as you’d like to Sky ain’t going anywhere soon!

    • Regan Cunliffe

      I beg to differ. The transition is being poorly managed and it is simply a matter of time before the wobbling wheels all fall off.

      In the UK, BT just secured the rights to the Ashes series over Sky. What happens when Sky loses the rugby rights here? They’ve already proven they don’t want to deliver for fans when pushed, despite having the means to.

      I’d suggest that both Lightbox and Netflix are going to make life very difficult for Sky in the years to come. As rights come up for renewal, the associated costs for Sky will increase which will only result in further subscription price hikes if they manage to retain the content they do.

      In reality, it’s going to be too little, too late for Sky as they’ve treated their customers as stupid.

      Telecom had to go through a massive rebranding to get away from the awful reputation and hatred for their brand that they’d created for themselves as a monopoly player. Sky is yet to go through that pain, but it’s coming. Boy, is it coming!

      • benpaul12

        I mean MediaWorks in terms of dwindling viewers because a loss of relevance/content – not their current financial situation.

        I agree with Regan, while Sky may be financially fine now, too many things are outside of its control; competition, technology, rights, customers etc.

        While Neon does have a good library it cannibalises their other product too much and they’d need to do a Telecom (as mentioned) – rebrand – to really make the change.

      • Dylan Bird

        Also agree with Regan. I can only imagine how ugly the battle will get between Sky and Lightbox/Netflix. Does anyone know if Netflix has dabbled in LIVE content before?

        • Regan Cunliffe

          They’ve never done LIVE TV but when I asked them about that exact thing earlier this year they told me that there’s no reason they couldn’t do it.

        • Jas

          How much losses would their parents companies let them make to get LIVE content? And would it be worth it for those losses when it is just as likely that the sports bodies will go straight to the viewers soon anyway?

      • Mike

        Regan, I’d be interested in your opinion on Sky in the UK. Package offering, pricing, positioning on internet offerings compared to UK competition and how it has treated its customers. Essentially how Sky plc has managed the transition to an online world.
        Would be interesting to see your conclusions on whether their management is due to fall on their swords and why their share price has managed to avoid the downgrades when all others havent. Do European/UK investors not understand whats happening to the traditional paytv model?