Despite missing target date, WWE still plans network

March 31, 2012

Despite a delay in its plans to get a network off the ground, the WWE is still working on developing an over the air network. Originally, the WWE had planned the network to launch in conjunction with Wrestlemania this Sunday.

The WWE’s CMO, Michelle Wilson, indicated to the News Times (a local paper in Connecticut) that the WWE is in late stage negotiations with a distributor.  Its goal is to reach 50 million viewers with its network.  Wilson stated that the WWE would charge a subscription fee from each distributor.  Wilson’s comments addressed concerns in a New York Post article which identified the delay for the network noting the difficulties faced by the WWE.

The WWE recently posted a disappointing 4th Quarter with substantial losses from its film division – another WWE venture which has been the brunt of the financial freefall by the company.  It also spent $4 million on building the network in Q4.

But the fact remains that the network must turn a profit sooner than later.  Analyst Michael Kupinski emphasized the need for this to the News Times:

“It appears that the company will bear much of the cost. They have soft fundamentals, and the cable channel could lose money for a period of years,” he said, adding that having a financial partner would help. Kupinski had previously said developing the new cable network could cost $10 million to $15 million.

The network would need to convince distributors that it would attract viewers and advertisers for it to catch on. It may be hard to attract a financial partner with the current economic climate and the fact that the WWE, like the UFC, enjoys control over its product.

Payout Perspective:

Looking at the financial losses the WWE’s film division has had would give pause to distributors and investors about the potential success of the WWE network.  It appears that the launching of the network at Wrestlemania was ambitious at best.  Despite great ratings from its television shows, producing 24/7 content will need to attract more viewers than its core wrestling audience.  While the WWE owns a vast library (which would be great for nostalgic wrestling fans), original content and WWE films might not get the job done. The WWE is cultivating its content on its YouTube channel but we will see if this translate to over the air success. Time (and its balance sheet) will tell whether the network will get off the ground and when.

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