WWE renews with NBC Universal

May 15, 2014

Variety reports that the WWE has come to terms with NBC Universal and will stay with its USA and SyFy networks.  While financial terms have not been disclosed, the decline of its stock price may foreshadow a lower than expected renewal rate.

In after-hours trading Thursday, the stock had fallen almost 24% to $15.50.  Of course, this may also be due to the announcement that its WWE Network may not make up lost money from PPV and on-demand revenue until 2015.

Per a WWE press release, the company “reached a multi-year agreement in principle with NBCU for the renewed U.S. licensing of WWE’s flagship programs and ratings juggernauts Raw and SmackDown.”

The announcement that Nikki and Brie Bella would be attending the NBC Universal “up fronts” on Thursday was a sign that the WWE reached an agreement with NBCU for its rights fee deal.  However, the deal is likely not what the company had expected.

The WWE wanted $280 million according to Dave Meltzer of The Wrestling Observer in his May 14th podcast. While some analysts had predicted that the WWE doubled its $140 million deal, it was downplayed by the WWE.  In its press release announcing the domestic deal, it also announced its work on deals in the U.K., Thailand and its intent to selling its rights in India. This would be something that would not be highlighted if it received a great deal.

The WWE earned $106 million of revenue from domestic broadcast rights in 2013 and $55 million overseas according to the Wall Street Journal.

Payout Perspective:

Based on the recent history of sports deals, including the news earlier this week that the MLS brokered a big deal with ESPN/Fox/Univision for five times the current value of its television deal, the WWE had hoped it would have capitalized on the market.

However, it appears that the WWE overvalued its worth.  While it has strong ratings for its RAW and SmackDown brands, its advertising rates were comparatively low.  There is also the perception problem.  Although revenues have grown since the WWE has gone family friendly from the “Attitude Era” of the 1990s, the mainstream view of professional wrestling remains that it is low class and the choreographed violence is unappealing.

With all the good news of the launch of the WWE Network coinciding with the rise in the WWE stock price exceeding $30 for a brief time, the news of its rights fee deal may cause a short term depression for investors.  In fact, the downward spiral in after-hours trading reflects this.

From NBCU’s perspective, renewing the WWE helps the value for the USA Network from a PR standpoint as Raw is one of the top-rated shows on cable.  This helps its overall cable ranking.  It can promote itself as one of the best in cable even though the WWE may not add much in overall financial value.

It will be interesting to see how WWE stock reacts in the next couple days when financial terms are released.

7 Responses to “WWE renews with NBC Universal”

  1. Sampson The One and Only on May 16th, 2014 9:04 AM

    $200 million is TWICE what the Zuffa gets from FOX.

    TWICE

  2. michael on May 16th, 2014 9:15 AM

    anybody buying wwe stock now?

  3. duck on May 16th, 2014 10:06 AM

    Sampson $200 million is what they hope to reach Worldwide from their new TV deals and that’s including a new TV deal in India.

    They said they were expecting around $280 million from just the US TV rights.

  4. rob on May 16th, 2014 1:45 PM

    @sampson. You’re correct 200 million is 2× more than 100 million. I will continue to say that UFC is underpaid. FOX is getting more from this deal than the UFC is.
    More importantly, UFC ppv buyrates (which is zuffas primary source of income) in 2013 were 6.1 million while wwe did 2.5 million buys (thats 2.44x more). TV deals are great but they are not the primary source of income for the UFC. Plus NBCU doesn’t make alot of money from wwe programming so their ratings don’t really matter monetarily. Companies arent exactly lining up to advertise during raw or smack down. 200 million is a significant # but not what they had hoped for so it is disappointing.

  5. Sampson The One and Only on May 16th, 2014 3:19 PM

    UFC is underpaid based on what?

    There aren’t exactly a plethora of networks looking to showcase their sub par product. I mean… Just look at their FOX ratings. Pathetic

  6. Fightbusiness on May 16th, 2014 6:52 PM

    Rob- I will openly admit I dont know the details of the UFC Fox deal but if in fact they are being given 100 million annualy for an estimated 20 shows thats about 5 million per show. After expenses thats not that much although I am sure tey are making a profit. No combat sport can get 3 million viewers consistantly. there are just to many channel options. Having said that if they dont get at least 3 million every show they will be canceled. i dont care what they say about male demos. Shows on other channels are getting 4-6 million during the same time. If they just had 1 show a month on basic cable they would be killing it.

  7. wqewqeqw on May 19th, 2014 4:09 PM

    the old WW deal was for $100M

    WWE was saying the new deal would be for 300M or 400M per year.

    the new WWE deal is for $150M year….WWE stock has went to SH*T..

    the UFC deal is for $90M.. this will make it tougher for UFC to re-negotiate their deal.

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