WWE Network finally happening

[David]

There was something in Bix's most recent column on Bleacher Report (http://bleacherreport.com/articles/1857046-wwe-survivor-series-2013-ppv-is-one-of-wwes-worst-built-cards-of-all-time) that I think is important to think about in relation to the WWE Network:

 

"WWE is on the cusp of changing their business model with the impending introduction of the WWE Network as an outlet for all non-WrestleMania PPVs at one third or less of the current PPV price. If they were to get full national distribution for the network and enough subscribers, I guess that lame duck shows like Survivor Series 2013 could become a little more commonplace. If you have a sufficient number of subscribers who are automatically being billed monthly, they're not going to cancel over one iffy show."

 

For their sake, I hope WWE doesn't feel this way. If they want to be able to get and keep at least a million subscribers, just about every PPV is going to need to have a hell of a build. They can't just throw together a card at the last minute and expect people to want to pay for it every month.

 

Considering creative's track record over the last few months, and the fact that their workload is only going to get bigger once the network launches, I don't see how they're suddenly going to get a lot better and create really compelling shows.

[jdw]

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?

 

I missed that "well-established" part.

 

John

[jdw]

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.

 

Cash and stock. The reasons lots of people take jobs.

 

It's also something that's will get launched if Vince and/or Trip really want it launched, and with the right model will be a "success" in the way other niche channels are. It's something that will look good on a resume in 5 years when said EVP wants to move on.

[mookeighana]

Has it been discussed how moving to the network model would impact anyone who had some kind of contract that dictated revenue based on PPV buys? There's barely any left in WWE (Rock, Cena, HHH?) that I think would have a contract like that. Perhaps it's most telling that someone like Brock was signed to a fixed contract ($5M for 3 matches or whatever the terms were) because that eliminates the cumbersome process of trying to deal with how you'd count revenue after a WWE Network model is implemented (which has a monthly subscription and is less likely to have huge swings/dips based on monthly attractions - at least, so I am surmising).

[kjh]

Has it been discussed how moving to the network model would impact anyone who had some kind of contract that dictated revenue based on PPV buys? There's barely any left in WWE (Rock, Cena, HHH?) that I think would have a contract like that. Perhaps it's most telling that someone like Brock was signed to a fixed contract ($5M for 3 matches or whatever the terms were) because that eliminates the cumbersome process of trying to deal with how you'd count revenue after a WWE Network model is implemented (which has a monthly subscription and is less likely to have huge swings/dips based on monthly attractions - at least, so I am surmising).

I thought all wrestlers other than The Rock just had downside guarantees that had to be met over a 12 month period? Given that the network isn't going to get coverage in the U.S. everywhere immediately and the international pay-per-views will continue, one would imagine they'll still get payoffs for each pay-per-view though the size of them will be lower unless the network is a big success from day one. In the end I can see a lot of disgruntled performers as they'll probably end up doing more work for the same or lower pay.

[mookeighana]

Has it been discussed how moving to the network model would impact anyone who had some kind of contract that dictated revenue based on PPV buys? There's barely any left in WWE (Rock, Cena, HHH?) that I think would have a contract like that. Perhaps it's most telling that someone like Brock was signed to a fixed contract ($5M for 3 matches or whatever the terms were) because that eliminates the cumbersome process of trying to deal with how you'd count revenue after a WWE Network model is implemented (which has a monthly subscription and is less likely to have huge swings/dips based on monthly attractions - at least, so I am surmising).

I thought all wrestlers other than The Rock just had downside guarantees that had to be met over a 12 month period? Given that the network isn't going to get coverage in the U.S. everywhere immediately and the international pay-per-views will continue, one would imagine they'll still get payoffs for each pay-per-view though the size of them will be lower unless the network is a big success from day one. In the end I can see a lot of disgruntled performers as they'll probably end up doing more work for the same or lower pay.

 

I was thinking about it the other way - referring to David's earlier point about whether PPVs will matter..... If guys know they're going to be paid more for doing a "PPV" (and PPVs will still exist until the Network has such coverage that it just doesn't make sense to offer them ala cart - i.e. they'll always exist), even if the storylines aren't culminating in a huge way at every monthly PPV, I still think wrestlers will be motivated to go out there and work hard. Now, there's always that potential of a WCW situation where people stop caring, but this is a company that's run a lot different than WCW and this is also not the same coasting-on-the-star-power crew that they had either.

[David]

Back in February, Dave said in reference to the network, "The biggest losers in the deal will be the talent, and I'll bet they haven't even figured that out yet."

 

So it looks like the roster's PPV payoffs will take a hit.

[kjh]

Has it been discussed how moving to the network model would impact anyone who had some kind of contract that dictated revenue based on PPV buys? There's barely any left in WWE (Rock, Cena, HHH?) that I think would have a contract like that. Perhaps it's most telling that someone like Brock was signed to a fixed contract ($5M for 3 matches or whatever the terms were) because that eliminates the cumbersome process of trying to deal with how you'd count revenue after a WWE Network model is implemented (which has a monthly subscription and is less likely to have huge swings/dips based on monthly attractions - at least, so I am surmising).

I thought all wrestlers other than The Rock just had downside guarantees that had to be met over a 12 month period? Given that the network isn't going to get coverage in the U.S. everywhere immediately and the international pay-per-views will continue, one would imagine they'll still get payoffs for each pay-per-view though the size of them will be lower unless the network is a big success from day one. In the end I can see a lot of disgruntled performers as they'll probably end up doing more work for the same or lower pay.

 

I was thinking about it the other way - referring to David's earlier point about whether PPVs will matter..... If guys know they're going to be paid more for doing a "PPV" (and PPVs will still exist until the Network has such coverage that it just doesn't make sense to offer them ala cart - i.e. they'll always exist), even if the storylines aren't culminating in a huge way at every monthly PPV, I still think wrestlers will be motivated to go out there and work hard. Now, there's always that potential of a WCW situation where people stop caring, but this is a company that's run a lot different than WCW and this is also not the same coasting-on-the-star-power crew that they had either.

Really, TNA moving to four pay-per-views a year and having special themed editions of Impact on the months without a pay-per-view is a good case study at the possible effects of moving most WWE pay-per-views to the network. In TNA's case, the TV specials seem less of a big deal than when the shows were pay-per-views, even though the wrestlers still put in the same effort.

 

I can't see the wrestlers, creative staff and management stop caring, as where else do they go to make the same money? It's not like WCW where the top stars could tank the company and realize there would always be WWE to go back to. The bigger risk would be burn out and the quality of the shows dropping as a consequence.

[cm funk]

Everyone has a downside guarantee (ranging from as low as $40,000 up to around a million for top guys are the numbers I've seen). A percentage of the house and a percentage of PPV money is set aside for talent. Then from that percentage it's divided up amongst talent based on card placement/estimated value as a draw, etc.

 

Meltzer talked about this recently related to the corporate shakeups. Jane Geddes had been doing payoffs and learned the system from Jim Ross. He said less guys were happy with Ace's payoff system because he used a stricter formula (and obviously with creative whims a strict formula may not be equitable). With Geddes bumped up and someone new taking over talent is worried about how it will affect payoffs.

 

It really is kind of a crazy system to still have in a publically traded corporate environment/era because it's very imprecise, open to the interpretation of the payoff guy, and could be seen as unfair in many cases. I know it's the way payoffs have always been done: champ gets a certain % guaranteed, challenger a certain %, all the way down to guys at the bottom who'd get what's left over in the NWA and territory days.....but it seems antiquated, along with the independent contractor status, lack of health insurance etc.

[cm funk]

Back in February, Dave said in reference to the network, "The biggest losers in the deal will be the talent, and I'll bet they haven't even figured that out yet."

 

So it looks like the roster's PPV payoffs will take a hit.

An increase in royalties for footage that appears on the network might offset that for a few guys (and help out some old guys), but yeah, it sounds like active wrestlers will lose out here

[jdw]

On Chris and Keith's question/point, people have language in their contracts for PPV bonuses. I believe it's standard language. Here's the language from Steph and Trip's contracts, since they have to be included in public filings since they're officers.

 

Steph:

 

7. PAYMENTS/ROYALTIES

 

7.1 ( a ) Unless terminated pursuant to the terms herein, PROMOTER shall pay WRESTLER each Contract Year the total sum of Three Hundred Twenty Five Thousand US Dollars ($325,000.00) (referred to hereinafter as “Minimum Annual Compensation”). PROMOTER agrees, commencing with the Effective Date, to pay WRESTLER the Minimum Annual Compensation in fifty-two (52) weekly installments consistent with PROMOTER’s regular payment procedures.

 

( B ) PROMOTER shall be entitled to deduct from the Minimum Annual Compensation any fines levied against WRESTLER, as provided for in Sections 8.3 or 9.13( a ); any costs or expenses paid by PROMOTER on behalf of WRESTLER, as provided for in Sections 8.1 and 9.13( B ); or any deductions permitted as set forth in Section 7.7 and 10.2( B ). PROMOTER shall also have the right to credit against the Minimum Annual Compensation: (i) any royalties earned by WRESTLER; (ii) any payments made to WRESTLER by PROMOTER in accordance with Section 7.2; and/or (iii) any other payments due or earned by WRESTLER for the rights granted herein or pursuant to the terms of this Agreement. For the purposes of this Agreement, any royalty payments due shall be deemed “earned” only at the time they are paid to WRESTLER.

 

 

( c ) Unless terminated for breach pursuant to Sections 12.1( a ) through ( f ) and 12.2, if applicable, at least one hundred twenty (120) days after each Contract Year, if it is determined that WRESTLER has earned more than the Minimum Annual Compensation for services rendered during that Contract Year, WRESTLER shall be paid subject to any permitted deductions or credits in accordance with Section 7.1( B ), in a one lump sum the difference between the Minimum Annual Compensation and what WRESTLER actually earned for services rendered during that Contract Year.

 

7.2 ( a ) If WRESTLER appears and performs in any Non-Televised Live Event, defined as an Event produced by PROMOTER in an arena before a live audience at which admission is charged other than those arena events which are taped or broadcast as set forth in Sections 7.2 ( B ) and 7.2 ( c ) below, WRESTLER shall be paid by PROMOTER an amount equal, in PROMOTER’s sole discretion, to such percentage of the paid receipts for such Non-Televised Live Event only as is consistent with the nature of the match in which WRESTLER appears, i.e., preliminary, mid-card, main event, etc. and any standards PROMOTER establishes specifically for such Non-Televised Live Event.

 

( B ) If WRESTLER appears and performs in connection with an arena or studio Event produced by PROMOTER which is taped or broadcast for use on PROMOTER's television network (“TV Taping”), WRESTLER shall be paid by PROMOTER, in its sole discretion, an amount only as is consistent with the nature of the match in which WRESTLER appears, i.e., preliminary, mid-card, main event, etc. and any standards PROMOTER establishes specifically for such TV Taping.

 

( c ) If WRESTLER appears and performs in connection with an arena or studio Event produced by PROMOTER which is aired or broadcast via satellite broadcast or pay-per-view distribution technology for use by PROMOTER (“Pay-Per-View”), WRESTLER shall be paid by PROMOTER an amount in accordance with the nature of the match in which WRESTLER performs, i.e., preliminary card, mid card, main event, etc., or any other standard PROMOTER, in its sole discretion, establishes specifically for that Pay-Per-View.

 

Trip's most recent:

 

7. PAYMENTS/ROYALTIES

 

7.1 ( a ) Unless terminated pursuant to the terms herein, PROMOTER shall pay WRESTLER each Contract Year the total sum of One Million US Dollars ($1,000,000.00) (referred to hereinafter as “Minimum Annual Compensation”). PROMOTER agrees, commencing with the Effective Date, to pay WRESTLER the Minimum Annual Compensation in fifty-two (52) weekly installments consistent with PROMOTER’s regular payment procedures.

 

( B ) PROMOTER shall be entitled to deduct from the Minimum Annual Compensation any fines levied against WRESTLER, as provided for in Sections 8.3 or 9.13( a ); any costs or expenses paid by PROMOTER on behalf of WRESTLER, as provided for in Sections 8.1 and 9.13( B ). PROMOTER shall also have the right to credit against the Minimum Annual Compensation: (i) any royalties earned by WRESTLER; (ii) any payments made to WRESTLER by PROMOTER in accordance with Section 7.2; and/or (iii) any other payments due or earned by WRESTLER for the rights granted herein or pursuant to the terms of this Agreement. For the purposes of this Agreement, any royalty payments due shall be deemed “earned” only at the time they are paid to WRESTLER.

 

( c ) Unless terminated for breach pursuant to Sections 12.1( a ) through ( f ) and 12.2, if applicable, at least one hundred twenty (120) days after each Contract Year, if it is determined that WRESTLER has earned more than the Minimum Annual Compensation for services rendered during that Contract Year, WRESTLER shall be paid subject to any permitted deductions or credits in accordance with Section 7.1( B ), in a one lump sum the difference between the Minimum Annual Compensation and what WRESTLER actually earned for services rendered during that Contract Year.

 

7.2 ( a ) If WRESTLER appears and performs in any Non-Televised Live Event, defined as an Event produced by PROMOTER in an arena before a live audience at which admission is charged other than those arena events which are taped or broadcast as set forth in Sections 7.2 ( B ) and 7.2 ( c ) below, WRESTLER shall be paid by PROMOTER an amount equal, in PROMOTER’s sole discretion, to such percentage of the paid receipts for such Non-Televised Live Event only as is consistent with the nature of the match in which WRESTLER appears, i.e., preliminary, mid-card, main event, etc. and any standards PROMOTER establishes specifically for such Non-Televised Live Event.

 

( B ) If WRESTLER appears and performs in connection with an arena or studio Event produced by PROMOTER which is taped or broadcast for use on PROMOTER's television network (“TV Taping”), WRESTLER shall be paid by PROMOTER, in its sole discretion, an amount only as is consistent with the nature of the match in which WRESTLER appears, i.e., preliminary, mid-card, main event, etc. and any standards PROMOTER establishes specifically for such TV Taping.

 

( c ) If WRESTLER appears and performs in connection with an arena or studio Event produced by PROMOTER which is aired or broadcast via satellite broadcast or pay-per-view distribution technology for use by PROMOTER (“Pay-Per-View”), WRESTLER shall be paid by PROMOTER an amount in accordance with the nature of the match in which WRESTLER performs, i.e., preliminary card, mid card, main event, etc., or any other standard PROMOTER, in its sole discretion, establishes specifically for that Pay-Per-View.

PPV's moved to a "subcription' based WWE Network fall in between 7.2( B ) and 7.2( c ). I suspect that since a fair number of wrestlers count on their PPV bonus money the same that regular folks count on their work Bonus and/or Christmas Gift that their companies hand out, Vince and the WWE would have to come up with Something that makes up for the loss of the PPV Bonus/Payment. And likely Something that's pretty close to that guys are making from the PPV's.

 

It's an accounting cost that that will shift from the PPV bucket to the WWE Network bucket. They reference "talent expenses" in filings when talking about PPV costs.

 

John

[JNLister]

The new Observer says there's talk of WrestleMania being free on the network for this year only, the idea being to get the biggest possible takeup on day one and then hope a large proportion of people don't bother cancelling. The problem is that although that strategy looks viable on paper for WWE, the cable companies would be very unhappy about giving up Mania PPV revenue.

[WingedEagle]

To say nothing of shareholders once they try to put that cat back in the bag.

[Wahoos Leg]

PPV's moved to a "subcription' based WWE Network fall in between 7.2( B ) and 7.2( c ). I suspect that since a fair number of wrestlers count on their PPV bonus money the same that regular folks count on their work Bonus and/or Christmas Gift that their companies hand out, Vince and the WWE would have to come up with Something that makes up for the loss of the PPV Bonus/Payment. And likely Something that's pretty close to that guys are making from the PPV's.

 

It's an accounting cost that that will shift from the PPV bucket to the WWE Network bucket. They reference "talent expenses" in filings when talking about PPV costs.

 

John

 

Or they'd do as many companies have done and decrease or cut the bonus structure and just expect their employees to get by on their regular salary.

[jdw]

Sounds like the WWE is in "Let's throw shit at the wall to see what sticks" mode with the Network. Never a good sign.

 

John

[cm funk]

Would be an interesting tactic. The way it was talked up in the past they'd have most PPVs on the network on a delay (a week or two later) while still airing first run on PPV. In theory best of both worlds, because there's that hardcore base that has to see the shows live, but people who otherwise skip shows or pirate might be more compelled to pay for the network. And WM, SummerSlam and maybe Rumble would be PPV exclusive and not air on the network til long after the fact.

 

If they did put WM on the network....would it air live and compete with the live PPV? Or would it be on a week or two delay? I'd guess delay

[jdw]

PPV's moved to a "subcription' based WWE Network fall in between 7.2( B ) and 7.2( c ). I suspect that since a fair number of wrestlers count on their PPV bonus money the same that regular folks count on their work Bonus and/or Christmas Gift that their companies hand out, Vince and the WWE would have to come up with Something that makes up for the loss of the PPV Bonus/Payment. And likely Something that's pretty close to that guys are making from the PPV's.

 

It's an accounting cost that that will shift from the PPV bucket to the WWE Network bucket. They reference "talent expenses" in filings when talking about PPV costs.

 

John

 

Or they'd do as many companies have done and decrease or cut the bonus structure and just expect their employees to get by on their regular salary.

 

The contract already gives the WWE the right to determine the payment amount, simply that it's structured by placement on the event, the type of event, whatever else the WWE wants to factor in (like buys), etc.

 

The standard contract attempts to cover all forms of performance, and paying people for it. They do this to avoid unforeseen stuff like Ventura taking them to the cleaners over video releases. To a degree they could try to shove this under 7.2( b ) as a TV Taping. But if you're removing 11 PPV's from the schedule, and tossing them on the Net to attempt to gain PPV Buy Equivalents (i.e. subs), they'll likely add a 7.2 (d) that refers to "an amount only as is consistent with the nature of the match in which WRESTLER appears, i.e., preliminary, mid-card, main event, etc. and any standards PROMOTER establishes specifically for such WWE Network Appearances" or some such language.

 

John

[David]

Would be an interesting tactic. The way it was talked up in the past they'd have most PPVs on the network on a delay (a week or two later) while still airing first run on PPV. In theory best of both worlds, because there's that hardcore base that has to see the shows live, but people who otherwise skip shows or pirate might be more compelled to pay for the network. And WM, SummerSlam and maybe Rumble would be PPV exclusive and not air on the network til long after the fact.

 

If they did put WM on the network....would it air live and compete with the live PPV? Or would it be on a week or two delay? I'd guess delay

The PPVs will air live on the network.

 

I get the feeling WWE will put Mania on the network. It's crunch time, and they need to do something to show that there are people who are interested in subscribing.

 

Of course, there's always the possibility that people will decide they don't want to pay $55 or $70 instead of $10 or $15 in 2015.

[kjh]

A replay of WrestleMania a few weeks after the event makes sense to drive subscriptions. Airing the event live is a reckless move. They'd need about 4.5 million subscribers (assuming universal clearance) to get the same amount of revenue that they would from airing the event on pay-per-view and cover the network's costs. And once you provide it for $9.95 there's no going back.

[David]

Keith, how did you determine the number is 4.5 million subscribers?

[JonnyBart]

The costs of the network will be spread over time; but they'll lose some immediate revenue on the loss of Mania PPV buys.

 

Putting Mania on the network is a risk, but this whole venture is a risk for WWE. Might as well go big.

[Bix]

I don't necessarily think it's a good idea, but I think it COULD work, at least in the sense that it's an all or nothing proposition. Though I do find myself wondering if they increase the likelihood by starting with the Royal Rumble. Try to hook the fans in for over three months and they'll be a lot less likely to cancel than if they start with Mania.

 

Is there any data about how much HBO & Showtime subscriptions fluctuate with the season premieres of their various original shows?

 

On a related note: This is stupidly outside the box, but maybe they could try to pursue non wrestling programming with the potential to be "buzz" shows? I feel like in the age of Internet TV criticism where you have shows like Switched at Birth (teen drama on ABC Family that's really about Deaf culture and class issues) and Orphan Black (sci-fi drama on BBC America of all places that has the single best acting performance on TV) picking up strong followings they wouldn't have had years ago, it's something you consider. They're at a disadvantage by being a premium channel, though.

[cheapshot]

Remember, if they put WrestleMania on the network, only the domestic PPV buy rate would take a hit currently.

[kjh]

Keith, how did you determine the number is 4.5 million subscribers?

Assuming WrestleMania 30 does 600,000 buys in the U.S. at an average price of $65, that would mean 600,000*32.5=$19.5 million in revenue. Say the network's running costs are $4 million for the month. So you would need $23.5 million in revenue from the network to break even. Assuming the price is $9.95 for the network and they receive half of that money per subscriber leads to a little over 4.5 million subscribers.

[bradhindsight]

Another benefit to putting Mania on the network is to push all the cable providers to offer their service. Think about it - if I use Company X and they DON'T carry the WWE network and I have to pay $60 on ppv versus signing up for $15 a month, I'm going to be pissed and call to complain.

 

Of course in this entire scenario they are canabalizing their own profits from not having it strictly on PPV.