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WWE Network: The Future of TV


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Wall Street hasn't been all that impressed with that with that 670k number, though. WWE's stock took a beating on Monday coming off Wrestlemaina. Investors are worried that WWE Network subscriber numbers won't offset the cannibalization of PPV revenues. It's believed that somewhere in the neighborhood of 1 million subscribers to WWEN are needed to break even on the venture. Plus, the whole goal was to monetize the library and make more money...something yet to be seen.


It's something I tried to articulate earlier in this thread, although my "rough numbers" were lower. But, numbers make the whole thing an uphill battle. Just as another example WM30 would have to have 439,000 PPV buys @ $60 on top of the 667,000 WWEN subscriptions @ $10 just to equal the PPV revenue of WM29. Now to be fair WWE has subscribers on the hook for a few more months during PPV's with lower PPV revenue numbers. So, it will swing to their favor in those months. But, if they don't get to and maintain that 1 million subscriber base year-round they will be effectively be loosing money as the WWEN $'s + this years PPV $'s won't equal last years PPV $'s.


That brings me to the "Weekly Shows" rights renewal. It's assumed Vince & Co. are hoping to offset some of the above loss with large increases in tv rights for the weekly shows. It's believed they are looking for 2x or 3x the $139.5 million annually that the package currently receives. However, NBCU has now let it's exclusive negotiating window expire. And, they are now testing the open market. Although possible I think it's unlikely WWE gets anywhere near what they are looking for in increases.


And, something else found interesting in a couple articles are the rumors that WWE might be sold or acquired. Investor Place lists Comcast and Madison Square Garden Co. as suitors. Forbes lists the same companies in there long form article on WWE Network. But, there was passage including a quote from Vince that really struck me as he didn't shoot down the rumor but, almost gave impression it's inevitable. The passage from the article is as follows: "Assuming McMahon doesn’t sell, there are logical heirs to his ringdom, but he is understandably coy about it. McMahon’s 37-year-old daughter, Stephanie, is the current chief brand officer, and her husband, Paul Levesque, is the executive in charge of talent, live events and creative, but there is no guarantee that the company will be run by another McMahon in the future. “I would like to see a degree of that,” he admits. “I just think as times go on, things will evaporate. Eventually Uncle Sam sees the benefit. You can’t do anything without Uncle Sam taking a huge bite of it.”


Suffice to say WWE is certainly in a period of transition.

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They are and have been since Linda and shane McMahon left the company to pursue other ventures. I think it would be unique if msg to bought them out, but who would that favor? Comcast buying them guarantees them a slot on Comcast networks but then would it be a repeat of turner and wcw? This is all questions that have to be seriously answered considering vince has slowly got himself out of the business. Its Stephanie and triple h running the show in one of (although not private) family businesses left.

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It is going to be interesting to see what is going to happen this upcoming PPV with both satellite companies not offering WWE PPV. I guess they both decided to carry WM30 because it is such a cash cow, but thats probably why. Still over a million for WM30 could mean that they are going to get the one million mark sooner.

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  • 1 month later...

Well, Wall Street again has dealt an impressive blow to WWE. Stocks which were hovering at around the $31 a share mark is currently at $11 dollars a share. Part of this is the new over the air broadcast deal signed by the WWE and NBCUniversal at $200 Million/year. Investors were thinking the deal could go higher (as much as 2-3X higher) but stocks have been plumetting since the deal was brought out Thursday afternoon.


Here are some of the notes of the WWE Conference Call they had today (courtesy Jason Namako of Wrestleview.com)




Vince McMahon portion

* Said he hopes to give a "great deal of clarity" to the callers about the Network and their TV rights deal.


* Said that perhaps they failed by giving so much transparency on the TV rights deal and hope to clear up any misconceptions.


* Said WWE was "somewhat disappointed" with the new TV rights deal with NBC Universal, but they nearly doubled their TV deals overall. They hit their goals internationally, but not domestically on what their research showed them. Its not what they wanted, but were happy overall.


* Said they have invested greatly in the WWE Network and their core business is "rock solid." They are blazing new trails and with that comes some uncertainity. They are trying to "clearly communicate" the impact of these changes on their business model.


George Barrios portion


* Said WWE has spent $75 million on the creation of the WWE Network and $40 million on staffing to create TV & digital content.


* Said their research provided support on the estimates of their new TV deals and in three of the four markets they made new TV deals in, the research was correct. They believe those deals will average around $200 million.


* Mentioned that if they get 2.5 million subscribers to the WWE Network, they can bring in more money than what they did with their old PPV model.


Caller Q&A portion


1. What is the operating expense for the WWE Network if it hits 1.5 million subscribers?


* Barrios: "Around $49 million."


2. Did the launch of the WWE Network hurt their TV rights negotiations?


* McMahon: "Fair question. It had some negative feedback on the TV deals, but they were in a chicken & egg situation where if they didn't launch the WWE Network when they did, they would have to wait a year to launch it, since Wrestlemania season was the best time to launch the Network."


3. How long are the new TV deals?


* Barrios: "None of them are longer than five years, some are shorter."


4. Is the future of the dividend safe going forward?


* Barrios: "If we are successful executing our strategy with the WWE Network, we feel comfortable maintaining our dividend."


5. Has WWE had any discussions about bringing the WWE Network to tradtional distributors?


* McMahon: "There are a lot of potential possiblities for the future, but it won't be their way or the highway."


6. What's with the high-end turnover of WWE Network personnel since the launch?


* Barrios: "Won't get into specifics, but we are very happy with the management team and with our relationship with MLBAM."


7. What's the current number of subscribers to the WWE Network?


* Barrios: "We are going to stick to giving out subscriber numbers on a quarterly basis, but those numbers will be released on the next conference call."


8. What happens if the WWE Network under-performs WWE's expectations?


* Barrios: "We have an idea what the next 18 months for the WWE Network will be, but we are learning a lot everyday and have new learnings. We wish we can give you certainity, but we can't."


9. What else does WWE have to help subscriber growth of the WWE Network?


* Barrios: "At our core, we have a team on working on things to help subscriber growth. We just announced Tough Enough and are in the beginning of planning new things for different segments."


Barrios thanked everyone for being on the call and the caller questions. Said that the purpose of the call was to bring clarity and hopes it helped the entire community. That ended the call.


News was also released that Lemelson Capital has bought a big stake in the WWE and wants changes to the management structure. http://seekingalpha.com/article/2223373-lemelson-capital-announces-stake-in-world-wrestling-entertainment-and-calls-on-board-to-pursue-new-management-or-ownership


Also an investigation has been launched against the WWE by a former attorney general in the state of Louisiana. The summary over the investigation is

KSF’s investigation is focusing on whether WWE and/or its officers and directors violated state or federal securities laws.

(Courtesy: marketwatch.com)

Full article of that story is right here: http://www.marketwatch.com/story/wwe-investigation-initiated-by-former-louisiana-attorney-general-kahn-swick-foti-llc-investigates-world-wrestling-entertainment-inc-following-disclosure-of-disappointing-distribution-agreement-2014-05-16?reflink=MW_news_stmp
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  • 2 months later...

WWE released it's second quarter results last week and the results were concerning especially as it relates to WWE Network. They ended the second quarter (ended June 30th) with only 669,750 subscribers to WWE Network, a net gain of only 33,000 subscribers since WM30! Although, they added a total of 161,000 "gross subscriber additions" to WWE Network these were offset by 128,000 WWE Network subscribers no longer part of the paid subscriber base. How could they "leave" if there was a 6 month commitment and, said commitment doesn't expire until this month? Well, WWE is attributing it to "payment issues". Apparently, the belief is that majority of these subscribers only wanted to watch Wrestlemania for $10. I'm beyond amazed that they didn't get their "six month commitment" upfront billing $59.94 upon signup. There is a good article on the whole situation on Bleacher Report.


With those "six month commitments" ended for early adopters later this month WWE is taking steps effectively "lessen the blow" and improve the company's bottom line. These include new pricing options, international expansion and a deal with Rogers that bears striking similarities to the recent deal the NHL struck with the company.


In further detail:

  • The Company will also introduce new payment plans in August, including a $19.99 monthly plan (with no commitment) and an upfront one-time payment option for its existing $9.99 per month offering (with six month commitment)
  • The Company has entered into a new 10-year partnership with Rogers Communications, a leading media enterprise in Canada, under a landmark television programming and WWE Network agreement. The partnership facilitates the launch of WWE Network as a traditional linear a-la-carte Pay-TV channel with a preview beginning August 12. The partnership also renews Rogers’ license of the Raw and SmackDown television programs, and grants Rogers distribution rights to the Company's pay-per-views.
  • The Company plans to make the U.S. version of WWE Network available on an over-the-top basis starting August 12th in over 170 countries and territories, including Australia, New Zealand, Hong Kong, Singapore, Mexico, Spain and the Nordics, among others. The network is expected to be live in the U.K. by October 2014. Plans for the network in Italy, UAE, Germany, Japan, India, China, Thailand and Malaysia will be communicated at a later date.

I'm assuming the new pricing options are to prevent "gaming the system." I read that to be either $19.99/month or, a one-time upfront payment of $59.94 and then $9.99/month thereafter. Why they weren't doing the upfront payment from the start I have no idea. It looks like the OTT international version of WWE Network will be the same as the US version. However, that is not the case north of the border in Canada as WWE Network will be a linear channel (with VOD service) in Canada. So, Canadians looking to subscribe will need first subscribe to cable and then get the "premium channel add-on" that is WWE Network. And, I'm guessing the schedule might differ slightly do to CanCon requirements.

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