WWE Finances

[jdw]

We don't really have a thread on it, with things going into various thread. Thought it might be useful to start a more general thread for more general items.

 

Chris put up a good piece on the WWE's stock prices going up-up-up and took a look at whether there are numbers behind it:

 

http://www.voicesofwrestling.com/2014/03/07/the-mystery-of-the-soaring-stock-price

 

Worth a read.

 

John

[Timbo Slice]

My big question has always been whether the WWE Network is going to be a long-term thing going forward for continuous subscribers. They really have to figure out how they're going to deal with content changes and additions down the road. Having the PPVs on there is all fine and dandy along with NXT, Main Event and Superstars, but there's a good chance come August that people won't renew if they don't step it up from a content perspective, which will skew the money even further. The assumption is that the service is a must-have for wrestling fans, and while it's still early, there are still questions about what the Network will mean going forward for programming.

 

On top of that, let's say there really is a big chunk of change waiting for WWE when it comes to the rights at the end of the road. They aren't going to get the long term money that most sports-based TV will get, they won't even get a good number of years. Betting on that money putting them into the black over that time isn't exactly a solid bet, especially with the numbers Chris posted. There's a lot of assumptions being made on the long-term viability of the network having the content to warrant its asking price.

 

The elephant in the room is whether or not the TV rights actually will happen the way they want it to and whether they would go totally in-house for all programming through the Network. That's something that they will have to seriously consider at some point if TV continues to go by the wayside. The recent Comcast/TW merger doesn't help things in that department.

[jdw]

The other elephant in the room is the recent Comcast-Netflix deal.

 

John

[rovert]

Seems to be utter bullshit but there is a rumour of a WWE-ESPN merger going around.

[goodhelmet]

Source?

[rovert]

Source?

 

 

A case of the "internets."

 

Can people can't read or don't believe this statement:

 

http://www.bloomberg.com/news/2014-03-07/wwe-expects-new-cable-tv-deal-by-early-may-cfo-barrios-says.html?cmpid=yhoo

 

Shares of Stamford, Connecticut-based WWE have gained almost 30 percent this week on prospects for a new online video network and a richer deal for the popular cable shows, according to Barrios. The company, controlled by founder and Chief Executive Officer Vince McMahon through Class B shares with added voting rights, isn’t in merger talks, he said.

 

ESPN is owned by Disney is structurally it isn't true.

 

Disney is in the market for acquiring entertainment entities. Disney recently bought Marvel and Star Wars though.

[jdw]

Sort of what Rovert said, if I can read those last two sentences right. ESPN wouldn't buy the WWE: it's Disney. They've made some major purchases over the past decade:

 

2004 The Muppets Studio
2006 Pixar
2009 Marvel
2012 Lucasfilms

 

In addition to locking in a significant number of sports leagues/conferences well into the next decade.

 

It's a tough time to buy the WWE with the stock price so through the roof... and Vince still alive and unlikely to want to sell it.

 

John

[mookeighana]

Thanks for posting my article John. I'm supposed to talk to another investor this afternoon about WWE so I will be curious whether they can give me some insight on why they think the stock has ballooned in recent months - particularly if there was any chatter in the investor channels that I haven't seen.

 

If anyone cares, here's all the articles I've written in the past three weeks about the WWE Network and/or WWE Financials and/or WWE Stock price:

2/20/2014 WhatCulture: 10 Controversies of the WWE Network
2/23/2014 F4W/WO: 2013 WWE Financials Examined Wrestlenomics-style
2/24/2014 Voices of Wrestling: WWE 2013 & PPV Breakdown
2/25/2014 Voices of Wrestling: WWE Network Launch Day Estimation
2/27/2014 WhatCulture: WWE Network Launch: All your Key Questions Answered
3/03/2014 F4W/WO: WWE Network 7 Days Later
3/05/2014 Whatculture: 14 WWE Network Risks That WWE Worries About
3/05/2014 Whatculture: WWE’s Current 15 Year Stock High Is Tied To Their Domestic TV Future
3/07/2014 Voices of Wrestling: The Mystery of the Soaring Stock Price
3/10/2014 Whatculture: 10 Ways WWE Can Maintain Their Current Business Success

[mookeighana]

I had a twitter exchange with an analyst yesterday that I'll share here:

[goodhelmet]

Great stuff Chris!

[jdw]

If anyone cares, here's all the articles I've written in the past three weeks about the WWE Network and/or WWE Financials and/or WWE Stock price:

 

 

We do care. One of the major reasons I thought to open this topic was a place to toss all sorts of financial stuff like that from you.

 

The TV deals will get done, and the network has lauched. But there will always be Business/Finance stuff popping up, and it could use a good general thread to toss it into. Then if it turns out to be major, it can be broken out like is done out of the "Comments that don't warrant a thread".

 

So... please keep tossing stuff in here, Chris.

[Timbo Slice]

 

If anyone cares, here's all the articles I've written in the past three weeks about the WWE Network and/or WWE Financials and/or WWE Stock price:

 

 

We do care. One of the major reasons I thought to open this topic was a place to toss all sorts of financial stuff like that from you.

 

The TV deals will get done, and the network has lauched. But there will always be Business/Finance stuff popping up, and it could use a good general thread to toss it into. Then if it turns out to be major, it can be broken out like is done out of the "Comments that don't warrant a thread".

 

So... please keep tossing stuff in here, Chris.

 

Seconded. The biggest thing WWE has going for them right now is how to build a good financial model because they want to keep the machine afloat and you've got the biggest finger on that particular pulse right now. It's great stuff.

[mookeighana]

In terms of original material, there's everything Dave written in the Observer. Almost every issue in the past few months has talked about the WWE Network and/or the WWE Finances.

Here's some other original articles that I've relied on heavily for new information. While almost daily I look for new material, and I'm still discovering articles that I've missed (such as the AdAgeone) that provide good insight on the chasm between TV/Advertising executives and WWE/Investors.

My list of other Good Reading Material regarding the Domestic TV Rights Negotiations:

Bonnie Hammer
10/9/2001 CNN: Bonnie Hammer: She is Sci Fi
Forbes: Power Women #61: Bonnie Hammer
12/19/2011 NYTimes: The Queen of Cable TV

Other WWE
3/29/2009 Variety: Men migrate to WWE programming
2/19/2014 Variety: Dish Stops Offering WWE’s PPVs Before New Network Launch
2/20/2014 Variety: WWE Has No Plans to Exit Film Business
2/23/2014 USAToday: WWE looks to break its own mold with new network

NBCU Overhaul
10/15/2013 Variety: NBCUniversal Sets Radical Overhaul of Advertising Sales Operations
10/24/2013 Variety: Steve Burke’s Reshaping of NBCU’s Top Ranks Unsettles Staff

WWE TV Rights
11/1/2013 Forbes: WWE's Hidden Gem (Chris Bevilacqua talks up WWE)
1/24/2014 NYPost: NBCUniversal, out to keep WWE, mulls Hall of Fame
1/29/2014 Hollywood Reporter: WWE, BSkyB Extend U.K. TV Deal
2/18/2014 LA Times: WWE shopping 'Raw,' 'Smackdown' and other TV properties (mentions that WWE had hired Bevilacqua)
2/18/2014 Variety: WWE’s ‘Raw,’ ‘SmackDown’ Could Find New Homes as Negotiating Window with NBCU Expires
2/19/2014 AdAge: WWE Will Struggle to Position Itself as Live Sports
2/24/2014 SEC: WWE 2013 Annual Report
2/25/2014 Motley Fool: Why WWE Might Not Get the TV Deal it Wants
3/7/2014 Bloomberg Businessweek: WWE Expects New Cable-TV Deal by Early May, CFO Barrios Says

[jdw]

Chris' latest piece hits both Network numbers and TV Deal, so I thought I'd toss it here.

 

http://whatculture.com/wwe/wwe-network-tv-rights-waiting-game.php

[jdw]

http://www.usatoday.com/story/money/markets/2014/04/07/world-wrestling-gets-wall-street-style-take-down/7418043

 

An estimate of 667,287 subscribers, which isn't bad at all. I doubt their global PPV number is that terrible either when one combines it with the Network number.

 

The stock is taking a pretty big hit, though it already was in a bit of a "correction" in the past couple of weeks.

[fakeplastictrees]

So that's a little over 40 million dollars. Not too bad. What will be interesting is to compare the numbers 6 months from now to the PPVs of 2013 from the same time period and see if WWE made close to or about the same. Of course there will be factors to consider.

[jdw]

The key thing to remember: they haven't killed off all of their PPV business with this, not have they launched the Network globally yet. So it's not really a matter of this:

 

PPV: $82M --> $0M

Network: $0M --> $40M

 

They are still pulling in PPV money, and they still have markets to roll the network out on.

 

All that said, I would look for:

 

* major PPV pushes this year

 

I would expect them to try to use SummerSlam and Survivors to spike up Network buys. Those two aren't going to be treated like "just another PPV" this year. They've floated that 1M number for the Year end, and they're going to probably use SummerSlam to try to lock in Renewals early, and then Survivors to both (i) get renewal of those who lapsed after the first six months, (ii) hit the year end number, and (iii) try to avoid having people sit the Network out until the next cycle to Mania probably starting with Rumble.

 

* massive pushes of the Network on Raw & SmackDown

 

Granted, we saw a big push to try to spike Mania buys. I suspect we'll see that for all the PPV's now. But what I mean is more in the sense that the Network is going to be constantly pushed on Raw & SmackDown similar to how the annoying Twitter hashtag shit is. We'll likely see more integration of the Network into Raw and SmackDown, and them experiment on how to push the Network without annoying the shit out of the viewers.

 

If 1M truly was the goal for 2014 rather than a low ball number tossed out that the WWE thought would be an easy layup to hit, then getting 2/3rds of the way there on what was effectively "opening night" of the Network is actually pretty good. If people internally truly were unhappy with this number, I would read that to mean that the 1M was a bullshit number, something that they were hoping to hit well before the end of the year and more likely want to reach 1.25M-1.5M as their real goal.

[mookeighana]

"What Does 667,287 subscribers mean for WWE?" http://whatculture.com/wwe/667287-subscribers-mean-wwe-network.php

 

I wrote a new piece for Whatculture about it. It's basically my excuse to use the word tepid & lukewarm a whole bunch.

[Loss]

I feel like moving Wrestlemania off of the network -- or raising the price -- would backfire in an enormous way. How do they justify that to the people who are already subscribing? That's not what they signed up for.

[Timbo Slice]

Well, if I carry the zeroes this time...

 

Not the best number, obviously. The 800,000 number being the break even point for me, I think you have to hope that turning the company in a new direction is going to incrementally keep the numbers going up over time. I'm not exactly worried, but now that we know the product is successful from a live streaming perspective, I feel that many of the fears people had are going to go away and you'll see a slight increase. A million is probably pushing it, though.

[mookeighana]

If you're interested in BREAKING NEWS AUDIO, Bix & I (and Rich from Voicesofwrestling) just did a one-hour #wrestlenomics Radio show all about the WWE Network Subscription #s: http://www.blogtalkradio.com/indeedwrestling/2014/04/07/wrestlenomics-radio--wwe-network-subscribers-announced

Direct MP3 link: http://blogtalk.vo.llnwd.net/o23/show/6/297/show_6297327.mp3

[mookeighana]

Also, Bix's piece about the WWE Network subscriber numbers is up at Bleacherreport:

 

http://bleacherreport.com/articles/2020295-biggest-takeaways-from-wwe-network-subscriber-numbers-announcement

[jdw]

I am less pessimistic about the number, unless the "1M" for the end of the year was a bullshit number that the WWE set that could but easily topped with a more impressive number such as 1.25M-1.5M mentioned earlier. If 1M is a real goal, then 2/3rds of them being paying customers right now is perfectly fine.

 

That 300K estimate for initial subs isn't a valid on: that was a trial, and there likely always was going to be some who just didn't pay. There always are a chunk of people who sub to something that's "free" and then opt out before it's time to get hit on their credit cards.

 

This is all a bit odd: I'm typically the most pessimistic jaded person on that board.

[mookeighana]

I feel like moving Wrestlemania off of the network -- or raising the price -- would backfire in an enormous way. How do they justify that to the people who are already subscribing? That's not what they signed up for.

I think messaging is a huge piece. Part of this is that hardcore fans aren't going to skip Wrestlemania, even if it costs them more. If you have the right main event (something wacky, like Cena vs Austin), you could definitely justify it.

 

I fear that putting WM on the Network every year basically commoditizes it so it's not a special event. That's what Dana complained about and I think he's right (in this instance). In lieu of a price increase, I'd rather WM was not on the Network and just took two weeks until it was up for replays. Especially if the Network focuses more on older content (Nitros, Raws) or even up-to-date replays (next day Raw, next day Smackdown) they can keep people hooked without leaving everything dependent on a single variable (i.e. Wrestlemania).

 

The key is that you can't just bait & switch people. But you've a year now to figure this out. I would imagine with the int'l launch being late 2014, they won't endanger things by stripping WM off in 2015, but if they did, they'd have a powerful bargining chip to offer the MVPDs for the rest of the year about why they should keep carrying their b-PPVs.

[mookeighana]

I am less pessimistic about the number, unless the "1M" for the end of the year was a bullshit number that the WWE set that could but easily topped with a more impressive number such as 1.25M-1.5M mentioned earlier. If 1M is a real goal, then 2/3rds of them being paying customers right now is perfectly fine.

 

That 300K estimate for initial subs isn't a valid on: that was a trial, and there likely always was going to be some who just didn't pay. There always are a chunk of people who sub to something that's "free" and then opt out before it's time to get hit on their credit cards.

 

This is all a bit odd: I'm typically the most pessimistic jaded person on that board.

 

Last night I told my wife that I expected to feel really, really stupid this morning when they announced the subscriber number. I was worried that I had been too pessimistic and that I was going to look foolish for ever suggesting they wouldn't be near a million by Dec 2014. After all, the Wrestling Observer Radio was practically promising that numbers looked great. So, I part of this is probably just my version of a huge sigh of relief that even if I don't really just the zany stock price assumptions, at least some of this still makes sense.

 

As for the 300K first-day(s) estimate, I am hoping we'll learn more in the next financial filing or KPI release. I still think the cancel rate was only 10-15% for the free trials, but wrestling fans can be a bitchy & stingy bunch.