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(THANK YOU to John Taylor for the new banner!) Welcome back to the EXCELLENCE IN COLUMN WRITING exclusively here at LordsofPain.net, as always. Special shout out to Chrissssssss (did I have enough “s”) for his retirement from writing columns here at LoP. Good guy and I wish him the best. Maybe I’ll join him in about 5 months when my 20 Year Anniversary of Mr. Tito comes up… But maybe I won’t? HAVE YOU SEEN THE NEWS?
I feel like I’m the “financial analyst of pro wrestling”. First, I reviewed the WWE’s 1st Quarter 2018 Financial Statements noting that (a) WWE’s revenues went down (lower attendance and merchandise sales) but that (b) WWE cut expenses significantly to have higher profitability. Next, everyone asked “but but but what about the Stock Price going up”. Once again, I answered with a whole list of reasons… And then I reviewed the Comcast deal with just Monday Night RAW. And now, WWE Smackdown will join the FOX Broadcast channel on Fridays starting during October 2019. Holy cow.
Before I get to anything, let’s just embrace Vince McMahon. For as much as we criticize the quality of his storylines and his overpushing of goofs like Roman Reigns, one cannot deny what an incredible business man he is. He took the WWE national during the mid 1980s to not only destroy all territories in sight, but pushing wrestling onto cable and making its characters become a huge part of America’s Pop Culture. Then, after the early to mid-1990s had stagnation in the wrestling business and legal troubles, he made the WWE rise from the ashes and grow significantly to actually put WCW out of business. Then, the WWE Network which has been a huge success. Now, Vince takes advantage of where the Cable/Satellite and Broadcast television are (desperate for live & unique content in the Netflix/Amazon era) and rips over $400 million out of corporation’s pockets.
And Vince McMahon does this despite these legitimate facts about the WWE in the United States since the last television deal was signed during 2014:
(a) RAW’s viewership has declined over 1 million viewers, FACT. The Monday show regularly did just above 4 million then, now returning to just under 3 million following Wrestlemania. Per today’s viewership numbers, we’re now 3 straight weeks under 3 million. No Brock or Wrestlemania to hype, no ratings.
(b) Attendance is down by thousands per show, rarely selling out with the exception of major Pay Per Views.
(c) Merchandise sales are down. Fewer people attending WWE shows will do that but WWE is also likely suffering from Brick & Mortar retail stores shutting down as everyone now buys online.
DESPITE those legitimate facts, particularly the lower TV viewership (over 1 million viewers lost for RAW), the WWE makes a killing on its latest deals:
(1) Extending Total Divas for 2 more years.
(2) Comcast signs only RAW but for “3 times” its worth. The 2014 Deal was between $175-$200 Million per year for all of the WWE’s television properties. If were to assume that RAW was at least $75 million by itself as a 3 hour show, we’re ABOVE $200 million for just RAW! 1 show is set to make more than the ENTIRE WWE television deal of 2014 with Comcast!
(3) FOX Broadcast channel reportedly signs a 5 year, $1 Billion Deal with the WWE to air WWE Smackdown on Friday nights.
F’N pinch me, man! You’re looking at a TV deal in the United States going from $175-$200 Million per year for all of the shows airing on Comcast to potentially $450 million and above per year (assuming Total Divas probably earns $25 million per year, maybe?). To be on broadcast television again which does NOT have the restrictions of needing a Cable/Satellite subscription could now cause the WWE to reach well over 110 million households (Super Bowls reach that much, could be much more). Yes, it’s on Friday nights, but I’d take it if I were WWE… $200 Million will help you wipe away the tears.
How did that happen? If the WWE product appears to be declining in viewership, attendance, and merchandise sales… How can this be?
All about the cord-cutters, baby. Since 2012 as more and more people figured out how GREAT having streaming services like Netflix and Amazon Prime were for binging television shows and they had NO COMMERCIALS, the need to have Cable/Satellite packages were declining. That, and the advances in Smartphones and Tablets also increased the demand for streaming services. Particularly, individuals 25 or younger (fresh out of college, in college, or younger) have ZERO need to subscribe to Cable/Satellite packages. At risk are individuals aged 25 or 45 who are quickly joining the cord-cutting population. In my opinion, that’s the biggest loss for Cable/Satellite subscriptions (including yours truly). Those aged 45 and above seem loyal to Cable/Satellite and that age group is actually where the strongest loyalty to Pro Wrestling exists (reported median age of 52 years).
What you’re seeing with Comcast, who is not only the #1 provider of Cable television but they also own the struggline USA Network. In the past, USA Network was one of top Cable channels and that was because of its syndication market for replaying older shows. Netflix and Amazon Prime have butchered their business model because with streaming services, you could watch any of the shows on-demand and without commercials. USA Network was inflexible in that you had to watch the shows daily by their schedule and was loaded with commercials. In fact, one of the reasons cited for USA Networks just letting the WWE go to Viacom’s TNN/Spike TV was because USA Network could make more ad revenue by showing more syndicated shows instead of the WWE.
But let’s talk about FOX… Right now, they are in the middle of a bidding war between Comcast and Disney corporations for its Television and Film properties. The Fox broadcast channel, once this sale is complete, will now have to pay for content that it used to own on its airtime. For example, The Simpsons after the sale will no longer be owned by FOX. They’ll have to pay Comcast or Disney for the rights of the Simpsons because they no longer own that intellectual property. With FOX flush with cash after this 20th Century Fox sale but also needing content, the WWE fits perfectly for what they need.
HOWEVER – Let’s talk about that FOX deal as the “ghosts of wrestling’s past” may re-appear to haunt the WWE. If you’ll recall during the early 2000s when WWE Smackdown was on the UPN Network, conservative media group “Parents Television Council (PTC)” began their attack on WWE’s advertisers due to the content of the Attitude Era’s programming. They still exist… On top of that, many FOX channels reside on Sinclair Broadcasting bought stations. If the PTC and Sinclair begin to team up on ideals, the WWE could have some problems on their hands. That said, this situation could be a major benefit to being a PG rated television show and trying to stray away from anything resembling the Attitude Era.
To WWE’s benefit, their television contract is up at a time where Cable/Satellite/Broadcast television channels NEED live and unique content. Even though the WWE’s viewership has declined, Cable/Satellite subscription losses have been worse…
But here’s the thing with both WWE and Comcast. Despite their declines in wrestling fans and subscribers, their PROFITS (Total Revenues – Total Expenses) are going up. It’s actually simple… You ration your existing supply. Take WWE, for example… In case you haven’t noticed, the WWE has increased ticket prices at Live Events significantly for the past few years. Yet, attendance has declined… WWE knows that they have a loyal element of fans who will attend live WWE events no matter what. Merchandise has also gone up in price. That’s no different than Comcast. They are increasing their prices annually on their existing customers. If they cannot find new customers, test their loyal ones. That, and reduce expenses elsewhere (which both have done)… Profit is not just about revenues but about expense management.
Think about how much the WWE and Comcast makes off of their past content. Comcast owns all NBC/Universal properties… This includes Universal films and anything aired on NBC. For anything to air on any Cable/Satellite/Broadcast channel or to stream on Netflix/Amazon/Hulu, a price must be paid by that channel or streaming service. In my opinion, where I believe Netflix will have its downfall is when networks like CBS and Disney start their own streaming services and begin to price gouge Netflix for their content. Recently, Comcast has challenged to purchase the 20th Century Fox intellectual properties and past TV/Film archives. Disney made the opening bid and Comcast has reportedly joined the bidding war. Why else would either company opt to pay more than a reported $40 billion for that content? They can sell it to channels or streamers while airing it with commercials on their networks. WWE Network and DVD/Blu-Ray sales are constantly making money off the past. Better yet for the WWE, they can bring back old veterans and they can still draw somehow during 2018. “Managing existing supply”, baby!
Everybody is going after International Markets… In case you haven’t noticed, many blockbuster films have made extra bucks in International Markets. While one of the Transformers films did poorly in the United States (just over $200 million, lower than expectations), other countries helped push that film’s net total to be above $1 billion globally! Now, the WWE has finally figured out the International Market model… GIVE THEM PAY PER VIEWS! The Greatest Royal Rumble will only be the start of this trend, as I believe that the WWE’s scaling back of RAW/Smackdown brand specific Pay Per Views was to make way for more special events overseas. WWE makes easy money and in return, they sort of act as a Tourism Special for a nation’s country via their WWE Network.
We could argue all day about RAW’s declining viewership, Creative Team decisions, and overpushing Roman Reigns/Jinder Mahal. But the fact remains that Vince McMahon is a better businessman than booker and he’s great at taking advantage of circumstances. Comcast and FOX are starving for content that cannot be streamed or is demanded to be seen LIVE as it happens to not be “left out” so to speak. Hence why ESPN, who is losing viewers, has overpaid for both the NFL and NBA. If you think that declining viewership is bad now, imagine if they lost their NFL or NBA contracts. Hence, they’ll overpay for that live sports content or else another sports network starving for content will. In fact, ESPN was in a bidding war for that content.
Think about your age and how you view content… If you’re under 25, you may not have Cable/Satellite at all… If you’re between 25 and 45 years old, you’re sick of overpaying for Cable/Satellite and you’re considering to “cut the cord”. This age group who grew up with technology during the 1990s understands how to use streaming services better than the generation above them. These are “at risk” Cable/Satellite subscribers to be lost forever (like myself). If you’re 45 and older, you’re “set in your ways” and have made up your mind that NFL, NBA, MLB, NHL, and WWE are your brands and you’ll watch them forever. WWE’s median age is 52 and thus this loyal fanbase will tune in weekly and probably account for at least 2 million of RAW’s viewers. It’s that 25-45 age group who grew up as kids seeing the Attitude Era who are SICK of the current product. That’s the type of fan who would cut the cord if they cannot take another 3 hour edition of RAW. Cable/Satellite companies have to appease those aged 25 and above or become a dinosaur industry. Hence, they’ll overpay for content, even if it is in decline (like RAW and Smackdown).
Vince McMahon is taking full advantage of the current Television landscape and because of that, he’s become even more legendary than before. Changed the wrestling scene during the 1980s by taking his company national, rebounded his company during the 1990s and took it public, and then made the WWE “flush with cash” with the recent television deals while having a successful WWE Network.
And it’s funny how Vince McMahon makes the majority of his money with the WRESTLING company.
Not with Bodybuilding (WBF).
Not with Pro Football (XFL).
Not with Movies (WWE Films)
Not with Music (WWE music label)
Not with Politics (Linda failing to become a Senator twice).
Not with Themed Restaurants (WWE New York).
The same guy who just ripped off Comcast and FOX for over $400 million per year over the next 5 years is also the guy trying to restart the XFL.
Come on, Vince. “Those who cannot remember history are condemned to repeat it” – George Santayana (1905-1906).
If the reports are true, the WWE is set to earn an extra $200 Million or more per year… That is huge. So what could the WWE do with that extra money? What could the WWE wrestlers do?
– Smackdown remains LIVE. WWE saves money by having RAW and Smackdown occur on back-to-back nights because the production trucks will tour near each other and they won’t burn out their workers (or pay overtime) when the tapings are close together.
– Brock Lesnar stays with the WWE, signs new multi-year deal. I believe that you’re seeing it already… Brock Lesnar is STILL WWE Universal Champion. With the FOX deal in particular, they would love to keep airing Brock Lesnar. Why not try him on Smackdown for a while? FOX’s airing of Smackdown may have more views than USA Network’s RAW because FOX is available in more homes.
– John Cena comeback? I can imagine that Comcast and FOX will want stars on their show and may put pressure on the WWE for certain stars. WWE could revitalize John Cena’s MAIN EVENT career. I get the sense that Cena wants to do the Hollywood stuff but his heart is still in wrestling.
– WWE wrestlers could demand to be paid more… Unionize? Sounds crazy, right? But that’s a large revenue increase and WWE doesn’t exist without wrestlers bumping in that ring. They are the ones enduring the injuries, concussion problems, and time away from their families. I wonder if any wrestlers or groups of wrestlers would challenge the WWE for increased wages/salaries or even challenge for benefits.
– Higher dividends on WWE Stock. More profits, more of a chance for the WWE to share their Net Income with their shareholders.
– Talent raids are coming. Everybody has a price. If you’re Kenny Omega or even Cody Rhodes, you may have a serious payday ahead of you. With a bigger wad of cash, the WWE could throw more cash at free agents and do so to keep competition down. Which, by the way, makes Cody’s decision to leave the WWE become an amazing decision by that young man.
– Higher production of RAW/Smackdown. One of WWE’s cost cutting measures was to scale down the RAW and Smackdown sets. Well, now they have $200 million+ to reinvest in how the show is filmed, how the set looks, and special effects added. Kevin Dunn must be excited.
Sky is the limit when Comcast/FOX want to hand you over $400 million to double your previous TV deal… Despite the WWE’s viewership, attendance, and merchandise numbers in clear decline. See me in a few years when I write several “Winner’s Curse” columns.
As I’m typing this, I’m watching RAW on Hulu… MY WORD, that Sami Zayn and Bobby Lashley segment was ALL TIME BAD! Good lord! Who is writing this crap? Can Comcast/FOX get a refund after seeing that?
SO JUST CHILL… ‘TIL THE NEXT EPISODE!
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