WWE TV Rights Deal

[Timbo Slice]

Fucking zeroes, man.

[goodhelmet]

What's fucked up Timbo is that I thought you were correct with your math. I had no idea you were off by almost a billion dollars.

[Timbo Slice]

As it is with most math errors, the calculation was correct but the numbers were wrong. I'm the one going back to school for math and here I am messing up a simple multiplication problem.

[flyonthewall2983]

So how soon will we know what's happening with this?

[Timbo Slice]

I thought I remember hearing end of April/beginning of May, but that might have changed at some point.

[jdw]

So how soon will we know what's happening with this?

 

Either:

 

(i) when the WWE gets the figure they want; or

 

(ii) the clock runs out and they have to take whatever they can get

 

There's no clock on the first. For the second, their deals run out later this year, and there needs to be a decent amount of lead time if they move off of Comcast/NBCU.

 

John

[sek69]

I still say WWE stays put unless Fox Sports decides they want another tent-pole attraction for FS1 to go with UFC and backs a dump truck full of money into Vince's driveway.

 

I'm pretty sure all they want from NBCU is enough of an increase of the rights fees to save face and perhaps a better network/slot for Smackdown. As much as the ratings would justify what they are asking for any other kind of programming, I just don't see them getting the level of increase they told Wall Street to expect. It's probably going to end up like the Network subs, not a bad number but disappointing based on hype levels.

[mookeighana]

I wrote up all of my latest TV Rights thoughts here: "WWE Investors Remain Confused Over Domestic TV Rights Negotiation Delays" - my thoughts on the TV Rights

 

 

That's Domestic/International and Advertising TV Rights 1999-2013 (I've normalized the WWE Fiscal years into calendar years using MATH~!).

 

The fundamental difference between WWE and Live Sports was encapuslated in two pieces:

* Ad Age: WWE Will Struggle to Position Itself as Live Sports

 

LA Times wrote:

The challenge for potential buyers is that although WWE fare gets big ratings, there isn't much of a trickle-down effect. Also, though WWE has softened its content to appease advertisers, it still does not always command a commercial rate commensurate with the size of its audience.

Basically, without the car & beer commercials, WWE generates far lower ad rates than other live sports programming. So, they have a few choices - find a way to generate higher advertising revenue (perhaps the plan from NBCU to cross-sell advertising by demographic across sister networks instead of thematic material), use the halo effect of WWE to prop up other shows (i.e. could WWE help Bellator or UFC), or use the halo effect of WWE to prop up the entire network overall (i.e. could WWE keep USA at #1 or bring much needed eyeballs to FS1?).

 

But when you think about all of the C-level programming that WWE has thrown out there (Main Event, Saturday Morning Slam, WWE Superstars) that has came & went without the hosts renewing, that's relevant that there's clearly only an appetite for the top-tier of wrestling programming (Raw & Smackdown). It's far from a given that WWE is just guaranteed to triple rates. It's all about number of bidders and what the real deals being offered are. Also, very importantly, WWE wants new rebroadcast rights for their shows so they can start putting new content on the WWE Network ASAP.

 

As John says, there's no timetable for WWE to announce. As I mention in my article, they did the smart thing and started early so they wouldn't be stuck at the last minute. For awhile I didn't believe WWE was going to delay announcing this deal again because it would hurt the stock but honestly I never thought they would go ahead and launch the WWE Network before they had the TV Rights all tied down. I can't predict what they're doing (or why) without more information about how the negotiations are going.

 

I was told at that coming out of the Annual Shareholder meeting (two weeks ago), WWE told everyone that they shouldn't expect an TV Rights update for the Q1 call (last week). And that's just what happened. So, they've known as since mid-April that the timing for this deal was "slipping", but honestly they always phrased it as "april to may". It's impatient investors who are pushing for the deal to get done because they're sick of not knowing anything and honestly I think some of them feel a bit embarrassed about how crazy their WWE Network projections turned out.

[jdw]

Thanks for continuing to pull these over, Chris.

[Bix]

They don't necessarily have to be live SPORTS though. The Sound of Music experiment did pretty well, and that sure as hell isn't sports.

[kjh]

My recent pieces on WWE business:

WWE Network: Desperate decisions expose corporate spin

http://www.cagesideseats.com/wwe/2014/5/6/5688202/wwe-network-desperate-decisions-expose-corporate-spin

WWE wrestlers feel the McMahons are stealing from their pockets to fund the Network

http://www.cagesideseats.com/wwe/2014/5/8/5696674/wwe-wrestlers-feel-the-mcmahons-are-stealing-from-their-pockets-to-fund-the-network

[jdw]

Thanks Keith!

[mookeighana]

I've took a poll over at F4W. Only 55 responses, so it's hardly a big sample size, but the results were interesting to me:

 

Average: $157M to $200M = $178M.

 

Rumors are swirling that WWE will announce their new domestic TV rights deal this week as part of NBCU's Cable Upfronts (Thursday, May 15).

 

In 2013, WWE brought in $105.9M in domestic TV rights. That included NBCU properties Raw (USA), Smackdown (SyFy), Total Divas (E!) along with Main Event (Ion) and some revenue from Q1's Saturday Morning Slam (CW). (I believe the rights for Hulu/Yahoo programming are included of Digital Media and not included in TV rights.)

 

 

I've estimated that Raw+Smackdown were worth about $86M in domestic TV rights for 2013. Combined with a full-season of Total Divas, the current value of the NBCU properties is somewhere around $100M. WWE has long been promising to double or triple TV rights, and while many suitors have been rumored (including but not limited to WGN, Viacom, AMC, Fox, Turner), the prevailing idea right now is that incumbent NBC Universal (with their right to match rival's final offer and retain) has won out. Some believe that having opportunistic timing and many bidders will get WWE a great deal. Others are doubtful that there were multiple networks that had serious bids.

 

With all of that, where do you think they'll announce? And how long will the next deal be? Previous deals have been for five years. Do you think they'd give up any revenue in order to secure better rebroadcast rights (i.e. shorter blackout period) for WWE Network?

 

I expect they'll announce the value of the "average annual" contract (which means the deal will start below the average and end above the average amount).

[jdw]

Here's what the WWE's new deal should be judged against:

 

http://www.sportsbusinessdaily.com/Journal/Issues/2014/05/12/Media/MLS-TV.aspx

 

$90M per year for the MLS. Their current deal is $27.9M. Look up the viewership numbers the MLS does in the chart in the piece.

 

Now one understands why Fox wanted it: they need *some* futbol leading into the 2018 World Cup. They know they're going to be in a war to get the EPL rights back from NBCSN, who were playing the long game as well in this one (dump an overpriced MLS to save money for the EPL and also chase the NBA and/or Big 10).

 

Anyway... $90M for that left of shit viewership, a more than 300% increase.

 

Your play, Vince. Even $180M a year next to that looks embarrassing, especially when the next EPL contract in the US will jump from $83M a year (NBCU) to vastly more given that it pulls in 440,000 viewers per game, four times as many as NBCSN is pulling in for their average MLS game. Seriously... think about that for a moment.

[jdw]

I'd add - the deal does cover certain USMNT games. Those averaged 1.3M viewers last year for ESPN in 2012/13 qualifying. It was for just 8 games, though... and while those are lusty number relative to the MLS is pulling in, comp those with Vince's numbers.

[Matt D]

No matter how WWE is trying to rebrand itself for this, it's not a sport. It is a block of live programming, and I KNOW we have to compare it to SOMETHING to understand what's going on, but do the networks see it as a sport?

[WingedEagle]

How do MLS ad rates compare with WWE's?

[jdw]

Hard to tell about the MLS. USMNT ad rates likely kick the living shit out of the WWE's.

 

Still...

 

Raw averages 4M viewers across 3 hours (+ overrun). SmackDown aveages 2.5M to 3M across 2 hours.

 

MLS on NBCSN a shade over 100K per game last year, while ESPN was 220K per game. It's early in the season, and there was an initial boost this year that people were giddy about... but you're seeing less stories about it now as the season is into May and the numbers are sliding back down.

 

Raw drew 40 times the average viewership of MLS on NBCSN last year, and 20 times the viewership that ESPN pulled in.

 

Wrestling Fans have to be the least valuable viewers on the face of the earth... which is a point a lot of us have been making for decades.

[WingedEagle]

No question, when the head count disparity is that wide it speaks volumes as to how little wrestling fans are valued as eyeballs. That same disparity can also explain some of the difference in deal packages, but that multiple probably doesn't explain the difference entirely. I'm sure the type of profile they're looking to keep for the network and ad packages as a whole is a huge factor as well and limits what they'll pay for "low rent" programming.

[mookeighana]

So, doing similar math to JDW:

 

 

In 2013, the 102 games averaged about 153,559 viewers/game.

 

With $75M/year and 102 games, that works out to spending about $735,294 per game. And assuming same number of viewers, that would be about $4.79/viewer.

 

Let's say Raw averages 4M and Smackdown averages 2.75M. That means the 104 episodes of Raw+Smackdown averaged about 3.375M viewers/show.

 

With $180M/year and 104 shows, that works out to spend about $1.731M per show. And assuming same number of viewers, that would be about $0.51/viewer.

 

So, a wrestling fan would be worth about a tenth of a soccer fan. I cannot fathom that WWE is walking away with a $1.8B/year contract, so it's clear that no matter what happens, there's going to be a huge discrepancy. John is right that $180M would be seen as tiny compared to what MLS just got.

[Matt D]

Does anyone ever call them on this stuff during the stockholder calls?

[jdw]

Chris:

 

It's 166,033 per the 61 that ESPN and NBCSN/NBC carried that ties to the $75M that ESPN/Fox will pay. Univision is paying $15M for their games.

 

Of course that doesn't factor in the USMNT games, which averaged 1.3M viewers in ESPN's three games in 2012/13. The argument a lot of people make is that MLS is a loss that Fox and ESPN are willing to take for the USMNT (and a lesser degree the USWNT) games, and also simply to have the "content" more than turning a profit on it.

 

But however we do the math, the value of a WWE Viewers is staggeringly awful relative to the value of the MLS/USMNT viewer, or the NHL viewer to NBC/NBCSN (though that was likely massive desperation at the time of that deal).

 

On one level, the WWE viewers are wildly undervalued as people have said for a while. On the other level, we've spent decades talking about how shitty the ad rates are for Pro Wrestling and that drives the value of the contracts.

[mookeighana]

Chris:

 

It's 166,033 per the 61 that ESPN and NBCSN/NBC carried that ties to the $75M that ESPN/Fox will pay. Univision is paying $15M for their games.

You're right. I was just looking at the article again and realized that there was a lot less games than I originally said.

 

So, they averaged 166,000/game for 2013 over 61 games. The new deal is for $75M for 68 games (mentions both ESPN and Fox get at least 34 exclusive games), so that works out to $1.103M/game. Thus, per viewer that would be like $6.64/viewer - 38% higher than I originally guessed.

[mookeighana]

My newest piece: Surprisingly Large MLS Deal Fuels Speculation On WWE TV Rights

http://whatculture.com/wwe/surprisingly-large-mls-deal-fuels-speculation-wwe-tv-rights.php

[yunro]

On the MLS deals, they have deals with companies such as adidas and Budweiser which I'm sure funnels some ad money TV's way.

 

Does WWE have any company of that stature willing to buy times during their shows.