Yes, that's caused by a fouled plug. The last one I helped my neighbor fix like that I used a propane torch to heat the center and ground electrodes red hot, then his small engine fired right up.
When the center electrode gets wet or soot fouled it has lower resistence and the spark can bleed off to ground before it jumps the gap. When you hold the plug wire away from the spark plug some distance then the coil has to build to a higher voltage to jump the combined gaps, and this almost instant high voltage jumps the plug gap before it has time to bleed to ground.