Much-delayed Igloo an unhappy place for Sky

WILLIAM MACE
Last updated 05:00 19/10/2012

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One of New Zealand most cool-headed executives, Sky Television chief John Fellet, says the delay in launching the discount service Igloo is "aggravating" him.

But shareholders at the company's annual meeting in Auckland yesterday didn't seem perturbed by the delay in the project, in which Sky has a 51 per cent stake alongside Television New Zealand.

Attendees enjoyed a typically slick video presentation showing Sky's success stories of the year, including the launch of the SoHo channel featuring shows such as Mad Men and Game of Thrones.

However, Igloo has so far failed to fire for Sky and TVNZ, and for Fellet, who has been at the company 21 years and at the helm for 11 of them.

Igloo was supposed to start in late June, but the launch was then postponed until July and then early August. The latest delay was announced a month ago, but another expected launch date was not specified.

At Sky's annual results briefing in August, Fellet said the cost of Igloo's delay had eaten into the forecast profit for 2013, which would stagnate at between $120 million-$125m compared to $122.8m in 2012.

In the scheme of things the initial $12.3m of capital expenditure committed to Igloo was not large, given Sky spent $137m in 2012, Fellet said yesterday.

But Sky had not been targeting potential subscribers at the "value", or price-conscious, end of the market as usual because it had expected Igloo to be active in that area by now.

"It's adding a great deal of aggravation on my behalf," Fellet said.

Sky's engineering team had now been made "totally available" to help fix technical issues at Igloo, which is separately managed by former Sky marketing executive Chaz Savage.

"In hindsight there's a lesson to be learned and that is that you never buy anything that's not being operated anywhere else."

Fellet also revealed television industry figures showing advertising revenue had slumped 3 per cent through the three months to the end of September, compared to the same period last year.

He said Sky's ad revenues had been bolstered during the September quarter by wall-to-wall coverage of the London Olympics, including on its free-to-air channel Prime.

The advertising market was more competitive and spending decisions were being dictated by the overseas offices of multi-national companies, often with an eye on cost, said Fellet.

"So many big brand decisions on advertising are not made in Auckland anymore - someone in Sydney or Singapore or New York is sitting there saying ‘we need to cut back 10 per cent, let's knock off Tasmania and New Zealand'."

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Rick Freisen, chief of television industry group Think TV, said the comparative advertising revenues were affected by free-to-air coverage of last year's Rugby World Cup on several channels.

He said a buoyant feeling among advertisers in the lead-up to the event distorted the typical seasonal market. 

- Fairfax Media

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