Reference no: EM131380501

ESPN's Worldwide Reach

It began by mistake. Back in the late 1970s, Bill Rasmussen decided to launch a cable station to broadcast Connecticut-area sports. With the assistance of his partners, Rasmussen leased a building in Bristol from which to broadcast and then bought some satellite time. Only after signing the agreement did he learn that his satellite coverage was national-and his small-scale plan of New England sports coverage began to grow. The early name for the channel-Entertainment and Sports Programming Network-proved too much of a tongue twister and, in 1985, they settled on the ESPN acronym as the corporate name. The letters now stand for nothing-except a sports phenomenon.

Since those early days during which the network scrambled to televise whatever it could-from a men's pro, slow-pitch softball game to its first NHL game in 1979-the organization has grown dramatically, filling what Will Burkhardt of ESPN says is now a saturated market for televised sports in the United States and rapidly moving overseas. "We reach 150 to 155 million households around the world [excluding the United States]; that encompasses about 180 markets and territories," says Burkhardt. ESPN reaches all seven continents, including one of the scientific stations located in Antarctica. The expansion has taken place over the last 15 years, beginning when ESPN provided groundbreaking coverage of the America's Cup international sailing race from Australia in 1987. That race seemed to be a turning point not only for ESPN, but for cable broadcasting itself.

From there, ESPN purchased a majority interest in the European Sports Network (called Eurosport) and began service to 25 Middle Eastern and North African nations. In addition to its Eurosport market, ESPN's largest international markets have become China, India, and Argentina. Burkhardt notes that ESPN entered the international marketplace because of a "desire to grow outside of the U.S. borders and to take what we had learned in the United States in terms of people's passion for sport... and bring that to the international marketplace." This was around the same time that cable and satellite television were expanding around the world, so ESPN's timing seemed perfect. However, marketing around the world isn't easy.

For instance, although India has a huge middle-class population, middle class in that country means that a family might earn about $1,800 per year, as opposed to an American middle-class family's earnings of $35,000 per year. Thus, attracting viewers to pay for television is more difficult in India. In addition, the infrastructure for cable television is very different from that of the United States, which requires more effort for ESPN marketers. India has tens of thousands of cable entrepreneurs serving approximately 100 customers each, instead of a giant like AOL Time Warner, which serves 13 million. Still, ESPN thinks that serving India is worth the effort and tailors its programming to the single most-watched sport in the nation: cricket.

In the burgeoning South American markets, where sports fanatics thrive, viewers can watch all kinds of programming-Argentine rugby, Argentine polo, Brazilian basketball, and Brazilian tennis, to name a few. But Burkhardt emphasizes that ESPN starts with a regional marketing strategy, "building a bed of programming from which you then start to localize." Currently, most broadcasts are in English or the local language, but dealing with some countries' multiple local dialects is extremely difficult. In addition, consumers in smaller markets want to see broadcasters of their own nationality instead of ESPN's standard crew of broadcasters. "There is no question that people in Mexico would prefer all of our commentators to be Mexican, instead of some who are Argentine," remarks Burkhardt. ESPN simply can't afford to provide this degree of customization yet.

Ultimately, ESPN's goal is to reach as many households worldwide as possible, despite any difficulties in penetrating new markets. For example, the company landed a huge deal that gave it distribution rights in Latin America for all four rounds of the Masters Golf Tournament. ESPN Latin America alone is now distributed in more than 11 million households in 41 countries and territories, broadcasting in English, Spanish, and Portuguese. In spite of victories like the Masters broadcast, perhaps one of the greatest challenges to ESPN is that the company must, in large part, make its pitch to cable and satellite television operators before its programming ever reaches the consumers themselves. Those operators conduct business in different ways, they lack rating systems, and some even replace ESPN programming with homegrown shows.

Then there are political challenges, such as when ESPN was thrown off Chinese cable after the United States mistakenly bombed a Chinese embassy in Eastern Europe. And there are legal tangles in each country that need to be dealt with, as well. But sports is an international language that tries to provide entertainment without political ramifications, and people everywhere love to watch. "We're obviously not trying to promote any kind of political message through showing an American baseball game," says Burkhardt. And perhaps that is the key to ESPN's success-its ability to bring sport to everyone, everywhere, anytime.

Question
1. How have environmental forces affected ESPN's worldwide marketing efforts?

2. Why is it important for ESPN to be global? What might be some barriers to trade for ESPN?

3. How would you describe ESPN's global marketing strategy?

4. Search ESPN's Web site at https://www.espn.go.com and summarize what it is doing in international markets.