The ESPN strategy will be handled out of Hong Kong by newly appointed Pacific Rim ad sales manager Sundip Agarwal. Mr. Agarwal, who previously headed Discovery Channel's ad sales operation in India, will report to Michael Fox, vice president of ESPN's world-wide advertising sales.
This is the first time ESPN ad sales has ventured into the region solo since forming a joint venture with News Corp's Star Sports network in early October 1996.
Ad sales for Japan, Australia and New Zealand (which fall outside of the ESPN Star Sports joint venture) have so far been handled out of ESPN's office in New York. Local ad sales in Japan fall under the joint-venture Sport-i ESPN, in which ESPN has a 20% stake.
ESPN's latest move will have no impact on the joint venture with Star Sports, ESPN insists. "Hopefully we will find ways to share knowledge and information," says ESPN Inc.'s Senior VP Willy Burkhardt.
The decision to devote increased resources to ad sales in Japan, Australia and New Zealand comes as distribution in the three markets increases and regulations on pay-TV advertising carraige ease, according to Mr. Burkhardt.
In Japan, ESPN is carried on the SkyPerfecTV and DirecTV digital direct broadcast platforms as well as on cable. It has distribution to about 2.5 million households, and is allowed to carry eight minutes per hour of advertising.
In Australia, the network has exclusive distribution on pay-TV network Optus Vision, and is planning broader distribution as the Australian market evolves beyond the current exclusive programming format. ESPN is carried as an extended basic channel on Optus Vision, which has 180,000 subscribers. As in Japan, the Australian satellite service is permitted to carry up to eight minutes of advertising.
ESPN is carried from midnight to noon on New Zealand's Sky TV, sharing a service with local network Sky Sports. ESPN retains the right to one minute per hour of advertising air time on the hybrid service. Expectations are that the full ESPN channel will be carried on New Zealand's new digital satellite platform when it launches in 1999.
So far, advertising sales in the three markets have been slow or non-existent, and revenue has been mostly from pay-TV subscription fees.
In Australia, advertising on payTV has only been allowed since mid1997. Sales projections for the new operation have not been set yet. "We are being realistic," Mr. Burkhardt says. "We are not going to go from zero to millions overnight."
The increased focus on Japan, Australia and New Zealand fills a gap in ESPN's global portfolio, Mr. Fox says. "Cable TV is relatively new and a number of advertisers are interested in getting into the market," he explains. With Asia in the midst of economic meltdown, profitability is not a key issue, he adds.
"Profitability is not something we are trying to predict... or something that I spend time agonizing over. We will ride with the economies in Asia. We are building a brand here, and that takes time."
Copyright August 1998, Crain Communications Inc.