WWE Network finally happening

[David]

I think a big issue with the network that really hasn't been considered is that the financial numbers WWE has given don't add up.

 

Here are the numbers they've released in various statements on their corporate site:

 

1 million subscribers: $40-70 million in network revenue, $25-30 million in total expenses, $5-10 million in potential cannibalization, $0-40 million in incremental EBITDA

 

2 million subscribers: $90-130 million in network revenue, $25-30 million in total expenses, $10-15 million in potential cannibalization, $45-95 million in incremental EBITDA

 

3 million subscribers: $130-200 million in network revenue, $25-30 million in total expenses, $20-25 million in potential cannibalization?, $75-155 million in incremental EBITDA

 

4 million subscribers: $180-270 million in network revenue, $25-30 million in total expenses, $20-25 million in potential cannibalization, $125-225 million in incremental EBITDA

 

 

There are problems with a couple of their claims.

 

1. The annual expenses. Dave has noted that WWE's internal projection for the annual cost is $50 million, which is $20-25 million higher than their public projection.

 

2. The estimated cannibalization. A few months ago, Mookie projected that WWE's domestic PPV revenue for non-WrestleMania shows will be about $45 million. If the number turns out to be close to that, how does it make sense that WWE would lose only 11%-22% of that revenue if the network gets a million subscribers (or 44%-56% if it gets 4 million subscribers)? Why would that many people still buy the PPVs if they could subscribe to the network and spend less money? Mookie figured a more accurate cannibalization percentage would be 75%, which he calculated would result in a $33-35 million loss in PPV.

 

 

The tricky part is the revenue per subscriber. Unless someone on here is a cable industry expert, I don't know of any way to calculate a more accurate number, so I'm going to use their revenue projections for the sake of the example.

 

Here is the calculated range:

Low: $40 million/1 million subscribers/12 months = $3.33 per subscriber per month

 

High: $70 million/1 million subscribers/12 months = $5.83 per subscriber per month

 

If we assume the annual cost of the network is $50 million and the PPV cannibalization is $35 million, the network needs to generate $85 million per year in order to break even. Using the calculated range, that means the average number of subscribers in order to break even would be somewhere between 1.214 million and 2.125 million.

 

Considering the fact that they've also cited other numbers to support the network that are pretty illogical (like the supposed number of households that have a current or lapsed fan), I'm guessing the accurate number lies somewhere in the upper end of the range.

[mookeighana]

http://www.f4wonline.com/more/more-top-sto...nnetwork-future

Several cable systems carrying WWE Classics on Demand were given word that the station would be shut down shortly. WWE later confirmed that they would be shutting down in February. This would seem to confirm the network is very much planned on going live about that time.

This is quite the companion to the opening & closing segments from the Goodhelmet WWE Network roundtable where we started about WWE 24/7-Classics on Demand and ended with a betting session on when the Network would debut.

[Bix]

WWE is still not committing to a date for the network even though all signs (including Stephanie's mouth) point to February. It's 3 months out. If they're not ready, then what's going on? If it's February, what are they waiting for?

 

Meanwhile I just wrote this: http://bleacherreport.com/articles/1855568...e-network-debut

[jdw]

You get the sense that Feb 2014 isn't totally set in stone.

 

John

[David]

If it's going to launch next quarter, how are they going to get distribution between now and then? There are no indications they've signed any deals with providers, so it seems like they're going to have to either

 

1. Sign deals that are very unfavorable for them, and then hope that they'll get enough subscribers so they'll have more leverage for the negotiations for the next deal.

 

2. Try to sign deals with small providers, advertise the fact that you can watch pay-per-views for $15 as much as possible, and hope that enough viewers will call their providers and demand access to the network.

[mookeighana]

I did think a little more about the alternative strategy that was brought up (perhaps Bix was the one championing it?) that if they have the WWE Network launched (which bypasses David's point - who will be carrying this?!), they could use it for leverage in the TV Rights negotiations so Raw or Smackdown had a potential backup network. Of course, they could never generate the money that they get from these shows (Domestic TV Rights in 2012 was $88.9M and 2013 was already looking to be $30M higher than that and that's prior to these large rights negotiations) and threatening to take your basic cable juggernaut (or more realistically your Smackdown off SyFy) isn't really something that would scare the NBCU or Viacomm. In fact, it would almost contradict what Vince had said in conference calls prior to this (though never let me stake my life on the continuity of conduct & thought of VKM.) This honestly works a lot better in the "WWE buys G4" model (basic cable) than the "WWE launches WWE Network" (premium channel) world.

[Bix]

Fuse is for sale. That's...something.

[KrisZ]

I still think it launches Mania night for the post show bonanza

[jdw]

This honestly works a lot better in the "WWE buys G4" model (basic cable) than the "WWE launches WWE Network" (premium channel) world.

 

G4 is effective dead:

 

http://en.wikipedia.org/wiki/G4_%28TV_chan...rriage_removals

 

Upon the re-branding of Style Network to Esquire Network on September 23, 2013, G4 was dropped from several cable providers. Time Warner Cable, and Bright House Networks (who negotiates alongside with Time Warner Cable) were the first to drop G4, citing the network's low viewership as "(not a) good value for our customers". Verizon FiOS also discontinued the channel on October 1, 2013, and Cablevision did so on October 10, 2013, pursuant to a filing with the the Connecticut Department of Public Utility Control (that state's utility service regulator) a month prior, that NBCUniversal had plans to discontinue G4's operations as of October 10, 2013. Comcast has announced in mid-October that it would remove G4 from its cable systems in January 2014. Although Comcast is G4's parent company, it has not been stated outright that the network will cease operations entirely at that time. Comcast's Upcoming Contract Renewals page shows G4 listed as "Comcast ceasing distribution" in January. Late in October 2013, Charter Communications, which was one of the charter carriers of TechTV when it was a sister of that network under the ownership of Vulcan Ventures, announced its intention to drop G4 on or after December 17; sister network Cloo will replace G4 on its systems. On November 1, 2013, Dish Network, which is a part owner of the network through its joint venture G4 Media with Comcast/NBCU, announced that it had removed G4 from its lineup, leaving satellite providers without said network as DirecTV already dropped it in November 2010. Cox announced that it will stop carrying G4 in all markets at the end of 2013.

The WWE would be buying nothing at this point as all the carriage deals are being backed out of.

 

I think I said something earlier about both the WWE and Comcast were really stupid in *not* working something out on a Joint Venture level early last year to take advantage of G4's existing carriage deals as a platform for launching a WWE Network. Likely some combo of:

 

* Comcast overpricing G4

* Vince being unwilling to joint venture

 

Since so many networks are joint ventures, it was pretty stupid for Vince not to be willing to go the route a long time again.

 

In turn, Comcast blew having a piece of a channel that might over time be more valuable than their marginal channels such as Chiller, Cloo, TV One and the coming Esquire Network (formerly Style). It also likely would have helped keep them in bed with the WWE for Raw (and SD unless the desire was to use that to anchor WWE Net) for the a pretty fair number of years to come: they probably could have used their contribution of G4 to the joint venture to drive a good long deal with the WWE for Raw at a reasonable price as part of a "Strategic Partnership" and some such nonsense.

 

No one said Comcast and the NBC Universal folks are the sharpest knives in the draw. Vince also isn't either when he gets outside of running WWE production.

 

John

[jdw]

I still think it launches Mania night for the post show bonanza

The worry about launching Mania night is that if there are bugs, they're screwed. You don't really want to bomb on your biggest night of the year. :/

[JonnyBart]

If it's going to launch next quarter, how are they going to get distribution between now and then? There are no indications they've signed any deals with providers, so it seems like they're going to have to either

 

1. Sign deals that are very unfavorable for them, and then hope that they'll get enough subscribers so they'll have more leverage for the negotiations for the next deal.

 

2. Try to sign deals with small providers, advertise the fact that you can watch pay-per-views for $15 as much as possible, and hope that enough viewers will call their providers and demand access to the network.

If they are going to a pay channel, then I wouldn't think distribution would be that big of a hurdle. It doesn't seem like it would hurt Comcast, DirecTv, etc. to simply offer the WWE network at $15/month, especially when they get a cut. Maybe there are some hidden costs that aren't obvious.

[khawk20]

Are we looking at a situation where their On Demand Channel goes dark without something launching at least close to that date to "replace" it?

 

Alternately, would they keep On Demand active if the February-ish target gets delayed for an amount of time longer than expected?

[mookeighana]

Are we looking at a situation where their On Demand Channel goes dark without something launching at least close to that date to "replace" it?

 

Alternately, would they keep On Demand active if the February-ish target gets delayed for an amount of time longer than expected?

Honestly, they only make about $5-$6M annually on the "Other (includes Classics on Demand)" segment of Live & TV Entertainment.

While it's certainly going to annoy some of their fans, honestly if they're hardcore enough to buy WWE 24/7-COD, they'll buy the WWE Network whenever it does launch and it's not going to kill ruin their bottom line.

[mookeighana]

This honestly works a lot better in the "WWE buys G4" model (basic cable) than the "WWE launches WWE Network" (premium channel) world.

 

G4 is effective dead:

 

John

 

I should have been clearer that I was just using G4 as an hypothetical example though as was pointed out, there was a time they could have struck and they missed it.

 

I don't disagree with your thinking of how that all could have worked and how it'd be a hell of a lot smoother than a nebulous premium channel launch.

[jdw]

If it's going to launch next quarter, how are they going to get distribution between now and then? There are no indications they've signed any deals with providers, so it seems like they're going to have to either

 

1. Sign deals that are very unfavorable for them, and then hope that they'll get enough subscribers so they'll have more leverage for the negotiations for the next deal.

 

2. Try to sign deals with small providers, advertise the fact that you can watch pay-per-views for $15 as much as possible, and hope that enough viewers will call their providers and demand access to the network.

If they are going to a pay channel, then I wouldn't think distribution would be that big of a hurdle. It doesn't seem like it would hurt Comcast, DirecTv, etc. to simply offer the WWE network at $15/month, especially when they get a cut. Maybe there are some hidden costs that aren't obvious.

 

Except they had issues getting carriers for 24/7 / Classics on Demand over the years. The Dish's wouldn't take it, and TWC wouldn't take it. It's not quite as easy as one thinks.

 

John

[kjh]

This honestly works a lot better in the "WWE buys G4" model (basic cable) than the "WWE launches WWE Network" (premium channel) world.

 

G4 is effective dead:

 

John

 

I should have been clearer that I was just using G4 as an hypothetical example though as was pointed out, there was a time they could have struck and they missed it.

 

I don't disagree with your thinking of how that all could have worked and how it'd be a hell of a lot smoother than a nebulous premium channel launch.

WWE did try the "buy an existing channel from NBCUniversal" route, as Vince McMahon apparently tried to buy the Universal HD network from his TV partners in 2011, but clearly the negotiations went nowhere if there was anything to that rumoured story.

[mookeighana]

Well, pieces are started to come together.

 

 

STAMFORD, Conn.--(BUSINESS WIRE)-- WWE (NYSE:WWE) today announced the appointment of Matthew Singerman as Executive Vice President, Programming. Singerman, who previously held senior level positions at Fox News Channel, TV Guide Network and Reelz Channel, will report directly to WWE Chairman and Chief Executive Officer Vince McMahon.

 

In this newly created role, Singerman will be responsible for the strategic development of content, including original, unscripted and scripted shows, scheduling of all programming and operations across all distribution platforms, including a potential WWE Network.

 

Singerman brings more than 20 years of experience in production and programming from various broadcast and cable networks. Most recently, Singerman served as a consultant for well-established and start-up channels, including NFL Network, Nuvo, Pivot and Back9 Network. Prior to his role as an industry consultant, Singerman was the Senior Vice President of Programming at Reelz Channel. In this position, he oversaw all programming, development and acquisitions, including The Kennedys, which was the highest-rated show in Reelz Channel history. The network's rating grew more than 300 percent during Singerman's tenure.

 

Prior to joining Reelz, Singerman was the Senior Vice President of Programming and Production at TV Guide Network. He spent five years overseeing all of the network’s programming, which included the creation of 10 new shows, and partnerships with top Hollywood production companies including Freemantle and Magical Elves. In this role, he also managed and recruited all of the network’s talent.

 

Earlier in his career, Singerman was Fox News Channel’s Executive Producer of Morning Programming, in charge of the Fox & Friends franchise, which included Fox & Friends, Fox & Friends First and Fox & Friends Weekend. During his tenure, he managed the production and booking for 21 hours of live television each week, and increased network viewership from 40,000 to more than 1 million daily viewers.

 

Singerman graduated cum laude from Tufts University with a Bachelor of Arts degree.

[JonnyBart]

There we go, his resume seems good though not stellar.

 

I think we'll get some kind of launch in the first quarter, but possibly just a soft launch on a few systems.

[jdw]

Singerman brings more than 20 years of experience in production and programming from various broadcast and cable networks. Most recently, Singerman served as a consultant for well-established and start-up channels, including NFL Network, Nuvo, Pivot and Back9 Network. Prior to his role as an industry consultant, Singerman was the Senior Vice President of Programming at Reelz Channel

He was with Reelz through at least 2011:

 

http://www.hollywoodreporter.com/news/matt...gramming-193318

 

He allegedly went to Back9 from Reelz:

 

http://adage.com/article/media/cable-s-cos...s-coming/238968

 

But there is a slight timelime issue with consulting for the "start up" NFL Network at some point between 2011 and now:

 

The NFL Network was launch in 2003. It's celebrating its 10th Anniversary this year. It hasn't been a "start up" for ages.

 

So yeah... Singerman will fit right in with the WWE. A Fox News bullshitter stretching his resume.

 

Reelz is a jobber channel, and I'm not entirely sure that his run at TV Guide Network was during a period of monster success.

 

But maybe he has connections! Or something...

 

John

[Bix]

2011 was when they made the big push to get NFL network on enhanced basic in most of the country, wasn't it?

[jdw]

It's been on Direct forever. Dish and Comcast added it in 2009. Charter in 2011 while he was still at Reelz. TWC & Cablevision in 2012. His January 2013 bio for Back9 where he's listed as "Executive Vice President, Programming", and that he came directly from Reelz to Back9. That bio makes no mention of the NFL Network:

 

http://www.back9network.com.php53-2.ord1-1...Kit-Jan2013.pdf

 

He was a recent hire when that got put up:

 

http://adage.com/article/media/cable-s-cos...s-coming/238968

 

And that blurb has standard stuff, again sans the NFL Network reference:

 

The network has recently hired former ESPN producer Robert Abbott as exec VP-production and content development and Matthew Singerman as exec VP-programming. Mr. Singerman joined Back9Network from Reelz Channel and previously was at TV Guide Network and Fox News Channel.

I looked at the various articles on him around the Reelz and Back9 period, and there's dick on him relating to the NFL Network prior to this blub.

 

Not it's possible that he's done some stuff for the NFL Network *this year* since leaving Reelz (which is hard to put a finger on when that happened since he was just freaking hired there within the past 12 months). But consulting the NFL Network in the past few months:

 

* isn't a start up

* and after most of the major shit already went down with the NFL Network

 

So while I doubt it's a total lie that he's done some recent work with the NFL Network... it's fluffing up his resume, and exaggerating.

 

He'll fit in well with Vince.

 

My other point: Reelz, Back9, TV Guide Network and a decade ago running the Fox News morning show isn't really the resume of a major player, or someone you have a lot of faith in. Again... maybe he has connections. But I'd rather get someone who *currently* is working in the cable arms of Comcast, Fox, Disney, the Discovery Communications, A+E Networks, Viacom, Time Warner, Scripps... or possibly one of the Carriers.

 

John

[cowboy hats]

Most recently, Singerman served as a consultant for well-established and start-up channels, including NFL Network, Nuvo, Pivot and Back9 Network.

You're making a lot out of a sentence that also includes the word 'well-established.' Why wouldn't reference to the NFL Network fall under that category, rather than one that makes no sense on its face?

[JNLister]

I can't see them launching on WrestleMania night. That's surely the worst possible day to ask people to pay more money, particularly when the main selling point is that you get every PPV *but* Mania for free.

[kjh]

But I'd rather get someone who *currently* is working in the cable arms of Comcast, Fox, Disney, the Discovery Communications, A+E Networks, Viacom, Time Warner, Scripps... or possibly one of the Carriers.

It's possible they tried and no-one bit. Two years ago, when the WWE network was first thought imminent the word was that were having great difficulty finding someone willing to pick up the poisoned chalice of running the channel.

[efrim]

But I'd rather get someone who *currently* is working in the cable arms of Comcast, Fox, Disney, the Discovery Communications, A+E Networks, Viacom, Time Warner, Scripps... or possibly one of the Carriers.

It's possible they tried and no-one bit. Two years ago, when the WWE network was first thought imminent the word was that were having great difficulty finding someone willing to pick up the poisoned chalice of running the channel.

 

Its no surprise really. WWE is not a super large or very prestigious company from the average business sharks perspective. Add to that the fact that the undertaking is very risky and you're probably only going to get up and comers. If somebody succeeds in doing a WWE network, I wouldn't be surprised to see them jump ship soon afterwards to a larger company