Sky TV chairman Philip Bowman on satellite strife, rugby rights, customer anger, board members living overseas and what lies ahead for pay TV operator

As she signed the new cricket contract at 6am – just a few hours after the Sky and NZ Cricket negotiation teams had reached agreement – she might well have afforded herself a smile.

Four hours later, she was in front of investors and media to deliver Sky’s half-year financial results – a 2% drop in revenue and a small, post-tax financial loss, adjusted to a $10.9m profit.

After weeks of negative headlines and having to deal with thousands of angry customers over an ageing satellite that had caused TV disruption, she, at last, had a PR trump card – the cricket was back from the end of 2026/27.

But that glow will have quickly dimmed as other major issues bubble away.

While cricket and other sports are important meals on Sky’s menu, it has still to land the true main course – rugby – and Moloney faced a series of questions about the latest rights negotiations with NZ Rugby.

Then on Tuesday this week, the NZ Herald revealed that a potential new broadcaster, British-based streamer DAZN, had entered the arena.

Sky, it appears, has a competitor for the rights. Its share price, which sat at $2.99 at the end of January, took another hit on Tuesday, down to $2.45. It rallied slightly to be at $2.52 by market close on Friday.

As negotiations drag on with NZ Rugby, there are serious questions to be asked: Could Sky lose its Golden Goose? And after all the troubles of the past few weeks, just where would that leave the company?

Philip Bowman rarely gives one-on-one media interviews. The Dubai-based Sky chairman is certainly forthright when he does open up.

Over a breakfast meeting at a waterfront Auckland hotel, he speaks frankly about the range of issues he, his board, Moloney and her executive team are confronting.

He is well-spoken – with a distinguished accent – and he emphasises key points with the word “candidly”.

Australian-born, Cambridge-educated Bowman has an extensive international business CV including stints as chief executive of Smith’s Group, Scottish Power, Allied Domecq, and Bass Retail, and 10 years on the board of Sky UK.

He was appointed Sky TV board chair in September 2019 – seven months after Spark Sport launched – and took on, he says, a “turnaround” company. He says he has specialised in leading them over his career – helping guide them to better days.

“The reason I agreed to be chairman for a business which was technically, I think, bust, was that it was a turnaround. And there was a slight emotional component because I’d been on the Sky UK board.

“It was a challenge, it was a turnaround, but one that could be delivered. We had a long walk through the valley of the shadow of death before we came out the other side.”

By the end of 2020, Sky chief executive Martin Stewart, a Brit who had been appointed in early 2019, had departed. Moloney, who had been the company’s chief commercial officer, took the top seat.

Over the past five years, the company has certainly turned over a fair share of executives and senior leaders – just two of the nine executives who were there in 2019 remain today.

Most recently, chief financial officer Ciara McGuigan, who was in the role for less than 12 months, resigned. Sky has not given a specific reason for her sudden departure; there has been speculation of some discord at executive level, with questions over the working relationship between McGuigan and Moloney.

Bowman won’t comment specifically on McGuigan’s departure or others.

He does say a number of the executives who departed earlier were “appointments made by Sophie’s predecessor”.

“The only observation I would make is that I don’t find that uncommon in the turnaround situation. Doing a turnaround is quite stressful and you can hire people who are a good fit in terms of technical capability, but maybe they don’t actually like the stress that comes with being with that. I’m not talking about this specific instance; I’m simply saying that’s what can happen.”

Bowman says Moloney has his full confidence.

“She’s very energetic, she expects performance from people, but in my view that’s a good thing. She’s done a good job. It’s been a very stressful time for her over the last six months and she’s come through that pretty well.”

An international board

Bowman is understood to be a reasonably hands-on chair, even from a long distance – he lives in Dubai and spends time in Australia. In fact, four of Sky’s six board members live overseas.

Bowman comes to New Zealand for board meetings, but for a consumer-focused company – especially one facing the strife that Sky currently does – it’s only fair to raise questions about the suitability of having so many board members living abroad.

“If you’re asking that question in Europe or the US, it would be a non-question because everybody is used to that,” responds Bowman.

He says he was accustomed to having international directors when he was an executive himself.

“The reality is that the trends in broadcasting, the trends in streaming, the trends in pay TV are not being driven out of New Zealand, they’re being driven in other parts of the world.”

He says British-based Kiwi Mike Darcey was an executive director of Sky UK for many years and is now a consultant. The company’s two Australian-based directors, Mark Buckman and Belinda Rowe, have deep corporate experience including across different media – Buckman’s CV includes a senior role at Foxtel while Rowe comes with a strong digital advertising background, from her time at Publicis. The two local directors are Dame Joan Withers and Keith Smith.

Darcey has been on the Sky board since 2017; Withers joined at the same time as Bowman in 2019. The other three have come on since.

“When I refreshed the board after I came in, we were very clear about what competencies and experience we wanted and, candidly, there were not those people necessarily who lived in New Zealand,” says Bowman.

“I always believe that having a mix of people from different environments is a much more valuable arrangement than having everybody from the one local pond, candidly, because you tend to get too much group think with that.”

The board – along with Moloney and her executive – has instilled more cost discipline over the past five years.

Sky is believed to have paid over the odds – about $111m a year – to secure in 2019 its existing five-year rugby deal. Tensions were high, with Spark Sport having launched that year, and snatching the cricket rights away.

Bowman says the company has also introduced much stronger data capability, allowing it to guide and frame its decision-making around known and potential audiences and revenue.

“One of the things that surprised me when I came in was that a lot of the methodology we had at Sky in the UK, 20 years before, hadn’t reached here,” says Bowman.

“We’ve put a lot of investment over the last five years into data analytics. You take a piece of entertainment content or sports rights, we are able to model what the likely revenue generation is from that. Therefore you can make rather better decisions in terms of how you allocate your capital.

“This was a business that had been effectively a quasi-monopoly. Any quasi-monopoly gets a bit fat and happy and is slow to change.

“We’ve had to make a lot of investment over the last five years in technical equipment to update that. We’ve had to make it in terms of systems within the business. We’ve actually had to stand back and say are we fit for purpose?”

Rugby rights

Those data analytics will be front and centre of Sky’s thinking, as it strives to negotiate a new rugby rights deal. There is much at stake – without rugby, Sky obviously risks losing a solid percentage of high-value customers.

According to its investor presentation last week, the company now has 465,000 customers with Sky Boxes or Sky Pods – down from 501,000 a year ago. Revenues from those customers are down 5%.

There are another 173,000 customers who use the Sky Sport Now streaming service and 264,000 with Sky’s Neon service.

Despite the importance of rugby rights, Sky appears to be in a new negotiation mindset compared with 2019. It is unwilling to pay an exorbitant fee – Bowman talks about “clearly” having a “Plan B”.

If necessary, the company seems prepared to walk away and reshape itself – likely with other major sports, such as league, football and (eventually) local top cricket at the centre of its customer offer.

Bowman defends the time it is taking to seal a new rugby deal. He says changes at the top of NZ Rugby – including the departure of NZ Rugby Commercial chief executive Craig Fenton and the arrival of new board chairman, former All Black David Kirk – haven’t been particularly helpful for the timeline.

“I know David reasonably well,” Bowman said. “I’m sure David and the new board have got a number of different ideas in terms of strategy, and they’ve got a number of pretty big challenges to face at the moment, so it’s not a surprise to me that probably the negotiations have not been at the top of the agenda.”

There were, inevitably, “different views” as to the value of the rights, said Bowman.

“That is only natural. I would say that around the world – it’s not an unreasonable thing to say – some sports codes are probably spending beyond their means. That’s true in New Zealand but it’s true in a lot of other places as well.”

He said ultimately any decision on rights would come down to commercial considerations: “What is fair value for our customers and our shareholders and what New Zealand Rugby thinks it needs to run their business.”

He said if he was in NZR’s position, he would be looking at its cost base “fairly carefully”.

“I would be very surprised, with David coming in, if they don’t do it.

“There has been a bit of an interregnum in negotiations. I can understand that. If you’re coming in as a new board and a new chairman, you probably want the opportunity to do the deal yourself, particularly if your strategy is going to be different.”

On the possibility that DAZN might be a contender – the interview was conducted before the Herald’s story confirming the UK firm’s interest – Bowman said: “They’ve got no real presence here; they’ve got no infrastructure here. It takes time to build that infrastructure if they wanted to do it.”

Moloney has said Sky is happy to consider co-exclusive rights – for example sharing rugby with a free-to-air partner such as TVNZ.

One suspects Sky, for example, would be very happy to forgo having to cover every NPC rugby match – that level of production incurs high costs.

Bowman has seen first-hand how Premier League football rights are now split in the UK – and working well – but he also cautions about the proliferation of streaming rights and sports themselves taking on broadcasting responsibilities.

“Increasingly, people are recognising that the consumer is getting fairly irritated by the fragmentation of sports rights, the fact you have to subscribe here, and here, and here.

“The concept of bundling suddenly looks rather more attractive than it did before. It’s interesting if you look at the viewership figures for many of the sports codes that have gone direct in certain markets – it has not been what it was cracked up to be by a long way.”

New Zealand Rugby launched NZR+ in 2023, a streaming app that many have speculated might one day offer direct-to-consumer live rugby in New Zealand. Until now, it’s really only been the home for complementary content such as historic games and bespoke Rugby World Cup shows.

Whether the new board of NZR has any appetite to continue with NZR+ remains to be seen.

An ailing satellite

Almost all of Sky’s major focus in the past six months, however, has been on another form of technology – some 36,000km above earth, the Optus D2 satellite has been fading fast, causing horrendous, well-publicised issues for thousands of Sky customers.

The D2 satellite has been placed in an “inclined” orbit in order to conserve as much fuel as possible. The problem, however, is that no one – first and foremost Optus – anticipated the level of signal failure this would cause.

Bowman reveals Optus will pay full, or almost full compensation, to Sky for the additional costs the pay-TV operator has faced as a result of the shambles.

That includes the cost of credits and refunds for customers – Sky has yet to reveal the full extent – and the additional cost of extra technician callouts.

The total compensation, Bowman expects, will be in the millions of dollars – but not “many millions”. “It will be relatively low from that perspective.”

While the problems have originated in space, they’ve been exacerbated by what’s unfolded on the ground.

For customers seeking help to fix their scrambled or frozen TV pictures, technicians have simply failed to show up on time, or at all, to fix the issues.

Sky revealed at last week’s financial results announcement that, at the peak of the troubles, it was receiving 500 calls a day. In more recent weeks, as Sky and Optus have been able to make some signal fixes, that number has now more than halved.

By April, Sky customers will be migrated to a new satellite, Koreasat6, which is now in the same orbit as D2. Testing is under way, and by all accounts, the signal is strong.

The customer response

Moloney has publicly apologised for the satellite issues, and Bowman has said: “We fell short.”

The woes coincided with a new contract in which engineering, infrastructure management and construction services firm Downer now handles technical callouts for Sky. Sky insists more technicians are available under the deal; they’ve simply been overwhelmed.

Sky lays no blame for the technical response on Downer. Bowman says the company has actually provided more resources.

“They have gone the extra mile without any doubt.”

That will be cold comfort to those who have waited at home for whole days without a technician turning up. Some, like former All Blacks coach Laurie Mains, had seven no-shows.

Bowman denies the move to Downer was an attempt to cut costs – “that’s probably a conclusion drawn without a lot of analysis of the facts” – and he is confident that, in the long run, the model is the right one.

Historically, he said the company operated with a large number of independent contractors as technicians.

“Some of those were good, some of those were less good. Some of those had good health and safety standards and [with] some of them, we were increasingly concerned about health and safety.

“The purpose of the RFP was not actually to save costs. The purpose of the RFP was to get more consistency in terms of service across the whole country.

“It was to improve the data we had on customer callouts. It was to actually set some targets in terms of performance … and service.

“From Sky’s perspective, clearly managing one subcontractor is a lot easier than managing a whole lot. That was the rationale for what we were doing and I think that thesis is still very much alive.”

Sky has previously not wished to comment on whether the new deal had seen a reduction in payment for technicians – one Sky customer has claimed that in Canterbury, for instance, the number of installers has dropped from about 150 to about eight because technicians were being paid $25 per installation rather than the $100 offered previously.

“While we don’t comment on specific commercials behind the legacy and new supplier relationships, we wouldn’t say that the assertion made is a like-for-like comparison,” said a spokeswoman.

Sky’s finances

The pay-TV operator last week reported a net loss after tax of $1.7 million – in what it has variously been described as a “challenging” and “difficult” six months. Revenue was back 2%, to $385m.

On an adjusted basis, the company’s net profit after tax was $10.9m. Not included in the adjusted numbers were the satellite migration costs, organisational transformation, accelerated content amortisation and lease modification.

At the presentation of its half-year results, Sky TV also narrowed and lowered its full-year guidance for revenue, ebitda and net profit after tax.

Revenue had been lowered to between $755m-$765m – compared with $760m-$785m last August. Ebitda guidance was now between $145m-$152.5m (previously $150m-$170m). Net after-tax profit guidance was now $35m-$42.5m (previously $40m-$55m).

The next quarter is critical to Sky’s longer-term success.

In a perfect world, its customers will all be successfully migrated to the new Koreasat6 satellite by April, and receiving crystal-clear reception.

Optus will have agreed to full compensation, and Downer’s technicians, no longer overwhelmed by the volume of callouts, will be turning up to customers’ homes, on time, to fix any issues.

In this perfect world, Sky will have also secured the rugby rights at a significantly lower rate than the previous five years, covering All Blacks tests, the new World Rugby Nations Championship, and Super Rugby. It might well be willing to relinquish or share NPC rights to the likes of a TVNZ.

In this scenario, with rugby secured and cricket back under its belt, Sky would then be able to plan its longer-term business strategies with confidence.

I ask Bowman if there is anything he’d have done differently in the past several months. He insists that on all matters in regards to the satellite, including its end-of-life timeline, the company was in Optus’ hands.

“The only thing I would say is we could potentially have tried training up some more people for call centres earlier than we did on a contingency basis,” he says.

“But then we go to the whole question of call centres. One of the reasons that we outsourced part of our call centre was the difficulty in recruiting people in New Zealand and training them to operate. It is something with hindsight you might have done, but it might have been difficult in any event.”

Moloney, meanwhile, says she’s fully aware of the customer anger, including the presence of a Facebook page “Sky NZ complaints” which has amassed 7600 members.

But with some signal fixes now in place, and the number of complaints starting to ease, Sky will be keen to ensure its customers are smoothly transferred to the new satellite in April.

That will then leave Moloney hoping the only other big document she needs to sign off in the next few months is the one with “rugby” in the title.

Editor-at-Large Shayne Currie is one of New Zealand’s most experienced senior journalists and media leaders. He has held executive and senior editorial roles at NZME including Managing Editor, NZ Herald Editor and Herald on Sunday Editor and has a small shareholding in NZME.