‘I have the deepest sympathy for John Fellet’: Mark Ritson on why the Sky isn’t falling

Alongside the release of Sky’s latest financial results, chief executive John Fellet bemoaned what he saw as the media taking every available opportunity to stick the boot into the company.

“The American humourist Mark Twain once said, ‘never pick a fight with people who buy their ink by the barrel,’” Fellet started.  

“I certainly understand this quote now more than ever. The media companies in question have spent a lot of effort running every negative article they can find about Sky, some of which sadly are justified, but many are not.”

Fellet does have a point here. There are many negative Sky stories published by the major news companies, some of which are based on little more than some petty social media fury.

There’s almost no way for Fellet to contend this without coming across as defensive, and the suggestion that there’s some type of conspiracy of negative media coverage against the broadcaster seems like a convenient excuse. And while it’s unlikely that journalists at the Herald, Stuff, Newshub or TVNZ have daily discussions on how to slay the beast, Sky hasn’t exactly endeared itself to journalists over the years (similar accusations are being levelled at the heavy-handed tactics employed by New Zealand Rugby). 

Sky has been particularly litigious over the last 12 months, taking legal action against TVNZ, Stuff and NZME over what it sees as unfair usage of its video highlights content, which it pays handsomely for the rights to broadcast. 

Enemies in court generally don’t get along too well in real life. And although media companies are, of course, expected to be objective when reporting on the news, they certainly aren’t above digging the knife into their enemies when they can (*ahem, Mark Weldon, ahem*).

One source has revealed that part of the reason Nielsen stopped sharing ratings data with journalists was because the requests were becoming increasingly specific and designed to highlight the poor performance of competing media companies.

It also goes without saying that media companies tend to be bad at reporting at their own businesses. Look at the reportage that emerges from Newshub or NZME during radio results season or after the Canons where they conveniently forget to mention the competition and it quickly becomes clear that most media companies won’t shy away from using their publications as a PR channel for a partisan narrative.

Beyond the partisan biases of media companies, recent studies have also shown that those working in media tend to live in bubbles removed from the general populace and over-index in digital media consumption. This often results in media types incorrectly presuming that their media habits are the norm.

Media analyst professor Mark Ritson has written extensively (and talked aggressively) about this trend and told StopPress that the coverage from other media companies (and a sophisticated PR machine from the digital behemoths) is having an impact on the perception of the popularity of TV, both free-to-air and paid.       

“There is a recurring theme across media journalism both in ANZ and further afield in which digital channels are seen as the future while ‘traditional’ TV is seen as being in a death spiral,” he said in an email.  

“In reality, when you strip back the bias and perceptual skew it turns out that TV remains a remarkably strong medium, far stronger than you would imagine were you to read the coverage of it in the media.

“Meanwhile, the positive nonsense being pumped out about digital video would suggest that most people consume most of their video online these days. Nothing could be further from the truth. Independent, representative data from almost every TV market shows the same thing. Consumers of all demographic groups continue to consume the vast majority of their video media via a TV, the figure is invariably somewhere in the region of 80 percent for almost every TV market on the planet.”

Ritson goes on to say that those numbers are obviously declining, but they aren’t nearly as significant as the media makes it out to be and there is a whole lot of life left in TV.   

“These trends have been overstated by a media desperate to look cool and incapable of reading a simple pie chart and doing their job properly,” Ritson says.  “John Fellet has my deepest sympathy because he has the unfortunate challenge of being the boss of one of the most watched TV channels in New Zealand. That means that, despite his viewing figures, most media journalists will keep hounding him on the death of TV and the rise of digital. Both trends are overstated.”

There’s no doubt Sky is facing a number of major challenges. In the recent financial year, it suffered its first drop in revenue since ages ago (from $928 million to $893 million) and customer numbers also declined (from 853,000 to 825,000); its share price is tanking; and global competition from tech companies is heating up, with the potential they could pay over the odds for extremely valuable sports rights it currently holds. But in 2006, Sky posted a total revenue of $549 million dollars and boasted 667,270 customers. Go long-term and the stories claiming the impending demise of the company – which have been common among the digital literati for many years – have been greatly exaggerated. And, as Sky’s Mike Watson said in an interview with StopPress a few years ago, it only requires, on average, four or five great TV experiences per week for subscribers to be happy to pay. 

From satellites to live streaming to SVOD services, it has continued to innovate and attempted to adapt to a new media environment. It is still a very profitable company, pulling in $116 million in this financial year. It is still a hugely popular service. And you’d hard-pressed to find a media executive in this country (or elsewhere) who wouldn’t be willing to trade their long-term results for these.  

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