Laura McGoldrick and Kirstie Stanway are among the hosts fronting Sky's Olympic coverage. Photos / Sky
Sky’s Olympic rights were agreed 10 years ago – a generation ago in the media industry and wider economy. They’re generating big ratings but also a big business challenge for the pay-TV operator.
On Sunday morning, Sky chief executive Sophie Moloney was watching live coverage of the Olympics – and on the hunt for one of her star hosts.
A technical issue meant Sky was screening an abnormal number of in-house promotions on its newly minted Sky Gold channel, at the expense of live Games coverage.
Between 7am and 8am on Sunday, for example, there were more than 13 minutes of Sky TV promos, including one six-minute period of in-house marketing.
“I was wondering when Kirstie [host Kirstie Stanway] was going to be back on my screen,” says Moloney.
“It felt uncomfortable – it was uncomfortable... it was an issue.”
That early hiccup has been overcome – thanks to a manual workaround – but there’s a far bigger challenge for Moloney and her team: ensuring the pay-TV operator can come close to breaking even on one of the world’s biggest sporting events.
Sky bought the rights 10 years ago, a generation ago in terms of the media industry and wider economy.
It is clear the Olympics are a massive drawcard – viewership numbers released today show 1.721 million watched Sky channels in the first four days of the Paris Games.
Those numbers will have surged again this morning, as the Black Ferns secured New Zealand’s first gold medal, beating Canada 19-12 in the rugby sevens final.
But it is also clear, in discussions with industry sources and Sky itself, that the pay operator would not – knowing what it does now – pay the same price for the rights today.
“You’re spot on to ask that question in the context of when the rights are secured,” says Moloney.
“The context of securing rights is critical to determining their value – 2014 [being a] very, very different circumstance to where we are now.
“The rights at the time ... I’m sure they looked very straightforward in the five-year plan that the prior CEO would have been running, but it’s not just about the rights costs, it’s the production costs.
“The costs of delivery of the number of feeds that we receive are pretty phenomenal contribution costs, as well as then producing the content in a location that has euros.
“With the New Zealand dollar to pay for it, even with good hedging, it’s a challenging uplift on those costs.”
She says the company doesn’t get to go back to Sky Sport customers and ask them to pay more because production costs are “much higher than we would like”.
Nevertheless, she is “very excited” about her team’s coverage and the business results to date – new advertising partnerships, an uplift in Sky Sport Now with its $34.99 Olympics pass, and strong interest in the Sky Open channel, which is playing Olympics virtually non-stop as the required free-to-air channel, supported by commercials.
But I ask Moloney outright: Will Sky actually make any money from the Olympics?
“As it stands, I don’t think we will,” she says.
“The board will be sitting post the Olympics and doing a post-investment review and working out, ‘okay where did we land overall?’
“Suffice to say this event can be pretty challenging to make money from because you pay a lot for two and a half weeks of content.”
The price that Sky paid has not been disclosed. Neither have the production costs – we might get some idea when Sky fronts up to shareholders for its annual results announcement in late August.
Sky has one of the strongest balance sheets in the New Zealand media industry - for the six months ended December 31, 2023, it posted a net profit after tax of $29 million, up 10 per cent on the same period previously.
Over a coffee at Sky’s central Auckland headquarters on Tuesday, Moloney points to a TV screen in the room. It highlights Sky’s relatively new purpose - share stories, share possibilities, share joy.
Moloney sees the Olympics playing a critical role in supporting that mission, especially as Kiwi athletes reach the medal dais.
“From a broader delivery for the country, right at this moment where people are... it’s been tough, right? We actually think it’s really important to have a look through that lens too.
“From a brand moment, it’s pretty significant.”
She reiterates that she is not suggesting in any way that the Olympics are a loss leader or a bad investment – simply that the rights were secured at a different time, and the company was now “absolutely maximising” the event.
Sky has 12 pay TV channels for the Olympics - including Sky Gold - as well as the free-to-air channel, Sky Open.
Sky Open and Sky Gold are essentially the same channel, showing a mix of live marquee events featuring New Zealand athletes and other major highlights.
They are both carrying big advertising loads.
A spokeswoman says: “Our free-to-air coverage – branded our Gold Channel – has an advertising split of 10 minutes per hour during live coverage and 12 minutes per hour during replayed coverage. A 12-minute ad load per hour is standard free-to-air minutage. Worth noting here that this year, New Zealanders are benefiting from nearly 24/7 free-to-air coverage on Sky Open.
“Comparatively for the Rio Olympics, there was around 15 hours of coverage per day on free-to-air [Prime] and this had an advertising split of 12 minutes per hour on live coverage.”
“Our 11 other Olympics channels have very low advertising schedules: five with two minutes of advertising per hour during live coverage, and five minutes per hour during replayed coverage – and the other six channels have no advertising.”
It’s a fine balance for Sky whose balance sheet over the past 12 months has been boosted with stronger advertising revenue, to complement its traditional subscription revenue. It has built up a strong in-house sales team to tap into the advertising market.
It is trying to delicately balance the needs of its customers and clients - making sure that subscribers receive an all-you-can-eat menu of sport, with low to zero levels of advertising, while non-subscribers enjoy free-to-air coverage supported by commercials.
There have been one or two grumbles on social media about the level of advertising, but Sky says it has not received any negative feedback.
While Moloney doesn’t yet know the exact bottom line from the Olympics, she is clear about the direction when it comes to future sports rights.
“The awesome thing now is we’ve got brilliant data in any of our rights deals as we move into them.
“We look at what is the value for us and our customers and we see that from what they watch and what do we think the growth audience might be, particularly in digital, to come up with a number.
“We’ll only be signing up to those deals if it does drive margin. Ten years ago, I’m sure it did look like it [the Olympics] was going to drive margin.”
Those comments are particularly poignant as Sky embarks on a critical 18 months – the renewal of rugby rights, and the possibility of bringing domestic cricket rights back into the fold.
Spark Sport nabbed the domestic cricket rights in 2019; they’re now with TVNZ following Spark Sport’s closure last year.
Moloney says in 2019, Sky had no choice but to take all of the rugby rights. “This time, we’re in a very different position.”
“New Zealand Rugby, with its Sanzar partners, has a plethora of rights on offer. We need to just see what those rights are and then we value it up and that’s part of the dialogue.
“Now, don’t get me wrong, rugby is a super-important sport. I think the key thing is just to understand the context in which you’re securing rights.
“The competitive landscape is one aspect of it, what we can afford to pay and what our customers value is obviously another vital part of it.”
Sky reportedly paid $500 million for the existing five-year rugby rights deal that finishes at the end of 2025. Industry pundits agree that there’s no way that level of fee will be paid this time around.
“Rugby and the rugby partnership is really important to us,” says Moloney, who also raises the prospect that other partners might pick up some rights.
She refers back to the Olympics deal when talking about rugby.
“The context of the time you’re doing these deals is absolutely vital. If you think about where we are from 2019 to now, it’s a significantly changed landscape. It’s significantly changed for us in terms of our overall shape of our customer numbers [and] our overall revenue.”
In terms of a timeline for the rugby rights, she says: “I would expect this calendar year or certainly by early next year that both of us will be in a position to understand exactly where we are with the deal.”
Rights for the 2028 Olympics in Los Angeles and the 2032 Olympics in Brisbane are now on the table.
Sky has a number of executives - including chief content and commercial officer Jonny Errington, chief customer officer Dan Kelly and chief media and data officer Lauren Quaintance - in Paris.
Errington, especially, is likely to be figuring large in discussions with the International Olympic Committee over the next set of rights.
Moloney will be striving to ensure she or any future Sky CEO won’t be sitting with a journalist in 2032 saying that the Brisbane Olympics will be run at a loss or just break-even.
Moloney says Sky’s post-Olympics investment review will look at the performance of the free-to-air Sky Open.
“We’re going to look at the data as we always do... is that going to be the right vehicle going forward?”
She was open to partnering with the likes of TVNZ or NZME in the future, as a free-to-air partner.
“I am excited about what we’re doing with Sky Open but equally – for these types of events, which are two and a half weeks... when you’re running a pay TV subscription business, you like season-long content delivering every weekend.
“It’s a big free-to-air obligation and delivery. I’m absolutely open to partnering – we partnered with TVNZ last time [for the Tokyo Olympics].”
As for that promo issue on Sunday morning?
“We had a technology issue that impacted the playout of our promo content in our Olympics coverage, which meant that these were played more frequently than intended, particularly during Sunday morning’s coverage,” says a Sky TV spokeswoman.
“The issue has been identified and our team are manually reviewing our promo load in the interim to prevent this happening again, while we work on a permanent solution.”
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.
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