In late January ESPN star sports, a joint venture of ESPN and News Corp., was left off the initial list of foreign networks approved by China's State Administration for Radio, Film & Television, which vets non-Chinese networks on an annual basis. The reason: ESPN officials inexplicably missed the meeting. ESPN International Managing Director Russell Wolff says negotiations are ongoing.
The potential loss of ESPN Star Sports in China wouldn't appear to be a big deal for the cable network. The channel is restricted by the Chinese government to mostly foreign eyes, in hotels and foreign compounds. But the ramifications of losing even this tiny foothold are huge. China — with 112 million cable subscribers, already the largest cable population in the world and one that's expected to hit 137 million by 2010 — is ESPN's thus far untapped mother lode, according to Ben C. Reneker, senior analyst at Kagan Research.
With 99 percent of the U.S. cable market covered, ESPN has turned its attention to ramping up its international division under Wolff, 39. In the last five years 10 international channels have been launched, bringing the total of overseas networks to 32 (14 wholly owned, 18 joint ventures) in 194 countries and territories. The number of international subscribers now totals 190 million, more than double the number of domestic ESPN subscribers.
But as the China episode shows, it hasn't been easy to go native. Until 2000 ESPN ran a single international version of its flagship show, SportsCenter, in hundreds of countries. The show was packed with a mishmash of highlights from sports around the world. A viewer in, say, Latin America might have had to sit through cricket highlights to find out who won the big soccer match. On-air hosts were eschewed in favor of voice-overs in nine different languages. "We attempted to cater to everybody," says Wolff, and in doing so, catered to no one.
So Wolff localized. In January a new SportsCenter debuted in Australia and New Zealand, opening with a montage of clips from homegrown sports like rugby and Australian Rules football matches. The show joined ten other regional SportsCenters in places like Brazil, India, Japan and Taiwan. The four networks in Latin America show soccer and baseball. The three channels in the Pacific Rim are heavy on rugby highlights. And the 13 channels in Asia show sports like table tennis and men's field hockey.
His strategy seems to be working, after the rough start. ESPN International earned $29 million on revenue of $160 million in 2005, up from $13 million on $146 million the year before. Latin America has been the big breadwinner, bringing home $21 million in profit in 2005, following a period of currency fluctuations and economic downturns that nearly pushed ESPN to sell the division.
Europe is ESPN's next target, but it has remained stubbornly resistant. In 2000 ESPN sold its 30 percent stake in Eurosport when it couldn't convince the pan-Europe channel to incorporate the ESPN name. It then launched Classic Sport in Italy, Germany and the U.K., but that division lost $24 million in 2005. In December ESPN bought NASN (North American Sports Network) for a reported $120 million. That network — with 6 million subscribers in 26 countries — caters to expatriates. But ESPN says it will rebrand the network and possibly use it someday to get live programming of soccer — for the locals.