Broadcaster embraces ‘T’ words

Sky Television is signalling with the naming of its next chief executive that it intends to put up a fight for viewers.

Sky dropped the words ‘‘transformation’’ and ‘‘transformational’’ five times in its short media statement announcing that seasoned media executive Martin Stewart would take the helm in February. The company titled its release ‘‘Transformational leader for Sky Television’’ to drive the message home.

The language is new. It is less than 18 months since John Fellet stated in Sky’s annual report that ‘‘now was not the time for a massive conversion’’ of its core business to a videoon-demand model.

But the immediate problem facing Sky is clear. Spark has turned a series of raids into the territory previously dominated by Sky Sport into a full-on assault by signalling a desire to broadcast local as well as overseas sporting events.

The economics of sports production has changed now that production company NEP is on the scene in New Zealand.

Fibre-optic broadband lets camera people film footage that can then be transmitted for editing in different cities or even countries, with no need for expensive outdoor broadcast trucks to roll towards stadiums.

Spark is valued on the NZX at $7.5 billion, while Sky is now valued at just $907 million.

That means Spark has deeper pockets than Sky and there would be nothing to stop it from vacuuming up most or even all sports rights if it chose – which it seems it might do.

The logical next step for Spark could be buying or striking a deal with the TV arm of MediaWorks, giving it a freeto-air outlet for its sports rights. That would nullify Sky’s advantage in owning Prime.

Suddenly, Sky has become the underdog.

One glimmer of light for Sky is that it has perhaps been quite clever in some of its recent sports rights purchases.

But ‘‘buying smarter’’ is a harder competitive advantage to sustain than being wealthier.

Sky is believed to be a couple of months away from finalising agreement with satellite operator Optus that should guarantee the future of its satellite TV service through to 2026, and it remains by far the most profitable media company in New Zealand.

But it is difficult to see what a ‘‘transformation’’ could entail – other than Sky forgoing profits for a slower rate of overall subscriber decline by selling its content more cheaply in smaller chunks online.

With Stewart yet to up-camp from Dubai, Kiwis may have to wait a couple of months to find out how the ‘‘next phase of the Sky story’’ – as he described it – will unfold.