What networks really would want RAW?

[Bix]

While the idea of RAW on a Sports network seems like an odd fit, so did moving from USA to TNN and they did that.

 

Plus, as has been pointed out by others, they're on Sports Networks overseas and haven't ever batted an eye about it. There is an increased willingness that they'll follow the money, and they really want those increased rates. For Vince, having FS1 in the bidding is crucial because otherwise I don't see how they can leverage USA to give them more dough, at least not more money in the ranges they're asking for.

I don't think Vince gives a shit about "FS1" bidding. He cares about "Fox" bidding. He really doesn't care too much about which Fox channel he airs on.

 

John

 

No concerns about the placement of FS1 on the dial vs. USA? Assuming its an issue, how much extra do they need to pull in in rights to compensate for a channel that's not as easily found as USA and the consequences for ratings / PPV that it may cause? Obviously we're at the stage where TV money is probably more important than PPV, but I'd think this issue is at least batted around in discussion.

 

With the numbers UFC did on launch day, I doubt that's an issue. FS1 needs non-UFC programming that people will actually watch.

[jdw]

Here's a reference image. You can see how much the deal to return to USA resulted in them ending their TV advertising revenues (in the US, they retained a small bit for Canada) and how it was a net decrease for them, although the story of TV Rights is always portrayed as being just a rocket to the moon.

I don't think anyone portrays "TV Rights" as a rocket to the moon. "TV Money" was a rocket to the moon, and a significant change in the money the WWE brought in:

 

FY1998 % of Corporate Revenue

35% PPV

27% Merch

23% House Shows

10% US TV Revenue

 

FY2000 % of Corporate Revenue

30% Merch

28% PPV

21% US TV Revenue

18% House Shows

 

FY 1998 to FY2000 Growth

406% US TV Revenue

335% Merch Revenue

242% PPV

239% Live Events

 

They all were shot out of a cannon, but TV went from being a method to advertise other live events (PPV and house shows) to being a significant revenue stream.

 

Rockets to the moon don't always keep going past it to Mars or Venus.

 

And about that Advertising Revenue in the early part of the boom, there's a hidden cost in there - the WWF/WWE was paying a large chunk of that revenue back to USA / The Networks. Looking at their FY2000 10-K

 

Revenue:

 

Live and Televised Entertainment. [...] Revenues from the sale of advertising time

and sponsorships increased by $17.9 million in fiscal 1999 as a result of

improved ratings for our shows and new contracts with the USA Network in July

1998 and September 1998, which provided us with the right to sell a substantial

majority of the advertising time in our programs.

Advertising revenue in FY1999 was $30.1M, up from $12.2M.

 

Cost:

 

Live and Televised Entertainment. The cost of revenues... an increase of $31.0 million,

or 46%. Of the $31.0 million increase, $19.4 million related to our new

contracts with the USA Network in which we are obligated to pay the greater of a

fixed percentage of our net advertising revenues or a minimum guaranteed amount,

and fees paid to our talent which are directly related to our increased

revenues.

Up $12.2M in advertising revenue, but they had to turn over $19.4M more to USA.

 

There also was this buried in SG&A:

 

Selling, General and Administrative Expenses. Selling, general and

administrative expenses, which include corporate overhead expenses, were $45.5

million in fiscal 1999 as compared to $26.1 million in fiscal 1998, an increase

of $19.4 million, or 74%. The increase was due primarily to an increase in the

number of full-time personnel by 58 persons. This increase reflects the

development and implementation of our home video and new media businesses, the

expansion of our advertising sales force to support our new contracts with the

USA Network, an increase in the number of personnel involved in the production

of our televised programming, and an increase in administrative personnel.

They had a massive increase in SG&A costs due, a good chunk of it related to selling that advertising.

 

A little more detail in the following year, the same 10-K, talking about FY2000 vs FY1999:

 

Live and Televised Entertainment. Net revenues were $265.5 million in

fiscal 2000 as compared to $170.1 million in fiscal 1999, an increase of $95.4

million, or 56%. Revenues from the sale of advertising time and sponsorships

increased by $47.8 million in fiscal 2000 as a result of improved ratings for

our shows, the full year impact of our agreement with USA, and a new contract on

broadcast television with the United Paramount Network ("UPN") for WWF

SmackDown!, both of which provided us with the right to sell a substantial

majority of the advertising time in the respective programs.

Advertising went to $77.9M, which was an increase of $47.8M.

 

Costs:

 

Live and Televised Entertainment. The cost of revenues... increase of $59.2 million,

or 60%. Of the $59.2 million increase, $30.3 million related to the minimum

guarantees associated with the full year impact of our contract with USA Network

and our new contract with UPN, fees paid to our guest celebrities and fees

paid to our performers which are directly related to our increased event

revenues. Of the remaining $28.9 million, $7.8 million was due to an increase in

television production costs, due in part to our new UPN program, WWF SmackDown!,

$6.7 million was due to increased arena rental charges and taxes, which are

directly related to our increased event revenues, $4.1 million was due to

increased sponsorship expense and $2.6 million was due to an increase in

pay-per-view and live event advertising costs.

 

Of the $47.8M increase, a large chunk was bled off to paying USA and UPN their cut of the ad revenues.

 

I'd have to dig deeper into the filings to see if there's ever good detail to calculate the likely % of the Ad Revenue that was being turned over to USA and UPN.

 

The WWE's current profit on TV Fees is in the 41% to 43% range over the last three years. It's a bit easier to pull that off the more recent 10-K's than the old ones, if it's possible at all off the old ones (I'm having a tough time finding what I need on the FY1999 and FY2000 ones). The costs are of course the production expenses, arena rent, performer payments (which likely have increased in terms of TV vs house shows), etc. I suspect, just by looking at that small amount of numbers that we have for 1999 and 2000 that the profit range in those years on TV Advertising was less.

 

That's why Vince (or the more financially sound members of the WWF/WWE) wanted to get out of the Ad Revenue business: it was a fake revenue, and likely one where, once they did the math, they were far better off just taking a Rights Fee than running the Advertising end.

 

In turn, I think we need to dig a little deeper before doing a direct 1-to-1 comp of Advertising Revenue vs Rights Fees given such a large chunk of that revenue was going right out the door via minimum guarantees (let alone going above the minimum guarantees).

[jdw]

No concerns about the placement of FS1 on the dial vs. USA? Assuming its an issue, how much extra do they need to pull in in rights to compensate for a channel that's not as easily found as USA and the consequences for ratings / PPV that it may cause? Obviously we're at the stage where TV money is probably more important than PPV, but I'd think this issue is at least batted around in discussion.

Not sure what you mean.

 

FS1 launched with about 90M households, about the same as USA.

 

As far as finding them:

 

441 USA HD

468 FS1 HD

 

My HD channels are largely in the 402-499 range, with some bleed over for pay channels (500-599) and "others" (in the 350-399 range). The others tend to be things like NFL Networks, PAC 12 networks, Fox Soccer networks, some Spanish language local ones, etc.

 

ESPN is down in the 424-426 range for ESPN, ESPN2 and ESPNNews. But FS1 is up in the band of sports channels from 463-474 that also has the two local Fox Sports (Angels, Clippers, Kings, Ducks and formerly Lakers, Dodgers and USC/UCLA before they headed / are heading to their own channels), ESPNU, NBCSN, CBS Sports, NHL+NBA+MLB channels, etc. Given the content that's headed to NBCSports and FS1, it's likely an easy one to find.

 

And I've got Time Warner, noted for being total assholes about this stuff.

 

So I don't think people will have issues.

[WingedEagle]

Interesting, I thought part of the issue with the new FS/FX channels were their placement. I've got TWC here in NY as well, where USA has been at 16/716 (HD) for quite some time. FS1 is 123, FXX is 124. That's sandwiched in between Jewish Life TV, Golf Channel and NBC Sports on the front end, and Fox Deportes, Lifetime Women and MTV2 on the back end. FS1 HD is 774, whereas for most channels higher in the listings (like USA), the HD version is just the SD channel preceded by 7 (i.e ESPN -- 28/728, FX - 10/710, USA, etc.).

[jdw]

Different carriers have different groupings. It's possible that New York has stuck to an old grouping, while out here we've gotten reorganized.

[Moonsault Marvin]

When Fox briefly ran Saturday Night's Main Event in the early 90's, I assume the deal ended because of bad ratings. Did Vince and Fox end on good terms or did he alienate them somehow?

[flyonthewall2983]

I'm guessing ratings and that they were just about to start Raw.

[Hollinger.]

When the switch from Speed to FS1 happened, DirecTV moved them from the 600s up to 216, right next to ESPN, MLB, NFL, NBA, NHL and NBC Sports.

[mookeighana]

When Fox briefly ran Saturday Night's Main Event in the early 90's, I assume the deal ended because of bad ratings. Did Vince and Fox end on good terms or did he alienate them somehow?

According to the Observer in 1992, it looks like by the second special, their ratings were pretty poor compared to what Fox was normally producing.

 

2/24/1992 issue:

 

There wasn't much good news this week in Titan, but perhaps the best was that the FOX network special on 2/8 drew an 8.2 rating and a 13 share. While that only ranked 74th out of 92 shows for the week, for FOX on a Saturday night, it was an unqualified success. While it dropped a full point from its lead-in show (COPS), it's still two points better than FOX averages in the time slot and beat out "Perfect Strangers" and "Growing Pains" enroute to finishing third in its time slot among the four networks, with the vast majority of the Saturday night viewing audience going to the Olympic games on CBS.

11/30/1992 issue:

 

The television ratings from the big shows this past week in the U.S. indicate more of the pattern of wrestling viewing down about 25% across the board. The Saturday Night Main Event on Fox on 11/14 drew a 6.1 rating and a 10 share, which placed it in 86th place for that week among 92 prime time shows. The rating and total viewing audience was the lowest ever for a WWF network show. It was down a full 31% from the February Fox special in the same time slot which featured Hulk Hogan & Sid Justice breaking up in their tag match against Ric Flair & Undertaker. I don't know if this will be the end of WWF getting network specials or not, but I'd say that one more rating like this would conclusively be the end of the line. Fox put the show in during the important November sweeps period with the idea it would deliver a rating like the previous one, which was a success. Instead, it lost 38% of the audience from the "Cops" show that was its lead-in, which in television terms, is considered a terrible performance. It also drew a rating slightly lower than Fox normally does with "Code 3" during the same time slot. Nevertheless, from a short-term standpoint, the show reached 5.27 million homes and about eight million total viewers, which is the best exposure any pro wrestling event in this country has had since the February Fox special. It's nearly triple the weekly audience that tunes into WWF Superstars in syndication nowadays. It should be noted that the audience for the Fox special with them plugging Warrior in the Survivor Series match was nearly quadruple the audience watching two nights later (2.0 rating in 1.44 million homes) for the two-hour angle where Mr. Perfect turned babyface to replace Warrior. While the angle itself, although predictable and coming off slightly desperate, was as well executed as it could be given the circumstances, largely due to Bobby Heenan, it was still a relatively small audience that saw it. The larger syndication audience didn't see the angle unfold, although the interviews on Saturday from both sides after the angle were excellent. Still, more people that not who watched the show on Fox probably still are unaware that Warrior isn't on the show, and there was plenty of advance warning to make it clear to the total audience that Warrior wasn't going to be on the PPV. Probably due as much to such a plethora of free television over a five-day period as anything, All-American Wrestling on 11/15 was the victim of this overexposure, drawing a 1.3 rating and a three share, both all-time lows.

12/7/1992 issue:

 

Don't expect another Saturday Night Main Event on Fox, at least not in prime time on Saturdays, as one week after the wrestling special did a 6.1 rating, the regular Code 3 show in the same time slot did a 10.8.

3/1/1993 issue:

 

WWF has added a June PPV from Dayton, OH. The planned 3/7 Fox Network pre-Mania live special fell through the cracks. Fox canceled the show this past week. Titan is now working on getting the special on USA network.

3/8/1993 issue:

 

The 3/7 Fayetteville show that was originally to be the Fox live special will instead be a taping for a two-hour special that will air 3/28 on USA. Top matches announced for the card (which doesn't mean any of them will air on USA) are Bret Hart vs. Lex Luger, Randy Savage vs. Yokozuna and Undertaker vs. Razor Ramon (who won't be back in time because of his recent knee operation). Hulk Hogan will be at the show doing interviews.

By 1994, you see stories about how WWF was trying to badmouth Fox's pre-NFL shows which was coming off as petty. I'm not a football fan, so I could be wrong, but my take was that especially after Fox got NFL in 1994, their interest in something like WWF (which from 1992-1994 was hurting) was not high at all.