March 25, 2016
Earlier this week, the U.S. District Court of Connecticut dismissed a portion of the claims of several WWE wrestlers which claimed the company knew or should have known about head injuries. Only one claim by two plaintiffs remains.
In a lengthy opinion, the court dismissed the lawsuits of William Albert “Billy Jack” Haynes III, “Big” Russ McCullough, Ryan Sakoda and Matthew R. Weise. However, one claim in the lawsuit of Evan Singleton and Vito LoGrasso remain with respect to “fraudulent omission” stemming from information post-2005. The claim was whether the “WWE became aware of and failed to disclose to its wrestlers information concerning a link between repeated head trauma and permanent degenerative neurological conditions as well as specialized knowledge concerning the possibility that its wrestlers could be exposed to a greater risk for such conditions.”
The former wrestlers had filed lawsuits in different jurisdictions but the WWE filed motions to transfer the venue to Connecticut and were granted the relief each time. Once the lawsuits were transferred to Connecticut, the state of the headquarters of World Wrestling Entertainment, the company filed motions to dismiss the wrestler’s complaints citing that they were time-barred by the applicable Connecticut statutes of limitations and repose.
The court dismissed the wrestlers’ negligence counts under Connecticut law. It also dismissed misrepresentation and fraudulent deceit claims as the plaintiffs failed to identify with specificity any false representation by WWE. In addition, the fraudulent concealment and medical monitoring claims were also dismissed. However, the court did not dismiss the “fraudulent omission” claims by Singleton and LoGrasso.
Notably, the plaintiffs argued that their case was similar to that of NHL players that brought a concussion lawsuit against the league. In that case, the judge allowed a “fraudulent omission” claim under similar circumstances.
The court indicated that the facts concerning the “fraudulent omission” claim would proceed as both wrestlers were active in the WWE on or after 2005. The plaintiffs will still need to establish facts after more discovery occurs in the lawsuit.
The plaintiffs might appeal although the court opinion was quite thorough. The strategy to move the lawsuits to Connecticut and rely on Connecticut law worked in the WWE’s favor. Every wrestler, except for Haynes had a forum selection clause in their contract which made the decision easier to transfer the cases. We saw a similar situation in the UFC Antitrust Lawsuit where the fighters were sent to Las Vegas from San Jose due in part to the forum selection clauses in the contracts.
The WWE is left with a narrow cause of action against it which may mean the possibility of a settlement. Of course, the court seems to leave open the possibility that after further discovery occurs, if the plaintiffs cannot establish facts for its case, a motion for summary judgment may be filed by the WWE. We will keep you posted.
March 22, 2016
On Monday, Florida jury tacked on an additional $25.1 million punitive damages award for Hulk Hogan. This amounts to a total of $140.1 million awarded to the former pro wrestler after the jury found in his favor and awarded him $115 million this past Friday.
Gawker Media was ordered to pay $15 million while Nick Denton was assessed $10 million and Gawker’s former editor in chief, Albert J. (“AJ”) Daulerio $100,000. Punitive damages are awarded in addition to the actual damages at trial. They are meant to reform or deter the defendant and others from engaging in similar conduct. Not every state awards punitive damages.
According this report, the trial court judge told the jury that they could not award punitive damages that would bankrupt the defendants.
The net worth was determined by the court (via www.capitalnewyork.com):
The court determined that Gawker Media, a U.S. subsidiary of Cayman Islands-based Gawker Media Group Inc., had $48.7 million in gross revenues last year and a net worth of just $83 million. It determined Denton’s net worth to be $121 million — $117 million of which is tied up in stock in Gawker Media Group, Inc., which is valued at $276 million. The court determined that Daulerio’s net worth was negative $27,000, since he has no material assets but $27,000 in student loans.
Gawker, et al. indicated that it would appeal the jury findings and the damages awarded in hopes of either overturning the decision and/or reducing the monetary award.
The moral of the story for AJ Daulerio is not to mess around at a deposition as it was his flippant answer to a question that seemed to have annoyed the jurors. Even though the court advised that it was not to bankrupt the parties in awarding punitive damages, it seems like the award would do so for Daulerio. One has to conclude that based on the monetary award, that Gawker will most certainly appeal.
March 18, 2016
On Friday, a Florida jury awarded Hulk Hogan $115 million in damages against news entity Gawker after it posted a sex tape of Hogan without his knowledge.
It is too early to know whether Gawker will appeal but according to CNN Reporter Tom Kludt Florida law requires a party to post a bond for the full amount of damages although that is capped at $50 million. The jury awarded $55 million in economic injuries and $60 million for emotional distress. This does not include an unspecified amount of punitive damages.
The NY Times provides a concise synopsis of the trial.
A statement from Nick Denton, founder of Gawker, inferred that there will be an appeal.
For those wondering whether Gawker could even afford to put up a supersedeas bond, Michael McCann indicates that Florida law allows judges discretion in determining how much a party must post especially if imposing such a bond would be a substantial injustice. But, even before an appeal, one might expect Gawker’s attorneys file a Motion for Remittur which would request the court to reduce the amount of damages awarded by a jury. In addition, or in the alternative, Gawker might seek a Motion for New Trial and/or Judgment Notwithstanding the Verdict. Each of these alternatives would see Gawker requesting relief from the jury award due to some legal circumstance that was not followed and/or was done in clear erro. Since the presiding judge would hear such a motion, the likelihood of success would be low since the trial court judge would be the one that would be overruling themselves.
We should see in the coming days the plan for Gawker. Frankly, Hogan is not getting the money awarded by the 6-person jury any time soon.
February 12, 2016
The WWE posted strong fourth quarter earnings as revenue increased 21% to $658.8 million, the highest in Company’s history. However, that was not enough for investors as the stock was downgraded a day after the earnings announcement.
The WWE reported a net loss of $1.2M adjusted for non-recurring costs which equated to a profit of 4 cents per share. While the WWE beat analyst expectations, it took a hit as the stock was downgraded to a ‘Hold’ from a ‘Buy’ by The Street Ratings.
The WWE Network reported 1.22 million paid subscribers at the end of Q4. It was a 49% increase from 2014 Q14. The WWE announced that it was the fifth largest direct-to-consumer OTT subscription service in the U.S. next to Netflix, Amazon Video, Hulu and MLB.TV. The WWE Network continues to expand internationally as it extended its reach to Germany, Austria, Switzerland and Japan with plans to expand into the Pacific Rim . It announced 277,000 international subscribers. This means that there was roughly 940,000 domestic subscribers and 277,000 overseas. According to Chris Harrington of The Wrestling Observer, there were 389,000 additions although there was a churn of 405,000 subscribers. But this quarter showed the most international subscribers since the network was offered internationally.
In January, the WWE was added to the S&P SmallCap 600 Index.
The 4th Quarter for 2015 brought the annual revenue is up 21% from the previous year. Per Harrington, the operating income and net income were the highest since 2013 but below the profitabil8ty of the 2007-2010 traditional PPV era.
The stock was down slightly after yesterday’s trading and was down once again on Friday to $14.65.
January 21, 2016
AXS TV announced that former WWE announcer Jim Ross will join AXS TV’s “New Japan Pro Wrestling” as its play-by-play commentator. Ross will join former UFC Heavyweight Champion Josh Barnett to call the action starting Friday, March 4th.
Via the AXS TV press release:
A WWE Hall of Famer, Ross was known as the voice of WWE for nearly two decades, bringing his incomparable broadcasting talent to hundreds of TV and pay-per-view broadcasts for the organization. No stranger to New Japan Pro Wrestling, Oklahoma native Ross also called the first-ever, live English-language broadcast of NJPW with Wrestle Kingdom 9 in 2015.
“I’m excited to join the AXS TV team in presenting the amazing athletes of the New Japan Pro Wrestling brand,” said Ross. “I’m a major fan of NJPW and look forward to joining Josh Barnett to form the best broadcast team in the genre. Business just picked up!”
Ross replaces Mauro Ranallo who departed the broadcast team to join the WWE and its Smackdown broadcast team as it moved to the USA Network from SyFy.
Payout Take: You may recall that Ross was dismissed by the WWE after an incident during a sponsored panel talk at Summerslam in 2013. Ross was the fall guy for an obvious inebriated Ric Flair during a panel discussion for WWE 2k14. The WWE announced that Ross was retiring but its clear that that was not the real reason. Since then, Ross has started his own podcast, called an MMA event with Chael Sonnen as well as Wrestle Kingdom 9 in 2015. Ross should be a very good addition to the popular show which airs on Friday nights.
January 9, 2016
We leave the last review of 2015 to that of professional wrestling.
Let’s do some quick hits before we get to the high spots.
- New Japan debuted on AXS TV to rave reviews. Mauro Ranallo and Josh Barnett served as the English commentators for the shows.
- Ranallo recently made the move from New Japan and commentating boxing events to being the voice for WWE’s Smackdown. He debuted as the new voice as it the Smackdown brand moved from USA to SyFy this year.
- Lucha Underground on the El Rey Network was the most-talked about independent hit. The mix of telenovela and independent wrestling action served as something different for wrestling fans. The second season of the show was in peril as it lacked the necessary funding and a television deal. However, news surfaced late in the year that it would return to the El Rey Network for a second season starting in January.
- ESPN and the WWE entered into a partnership in which the sports cable network will feature a weekly segment with WWE wrestlers. 2015 saw ESPN expand a little more into the world of entertainment which included covering Summerslam (which was in Brooklyn, NY this year) and the announcement of Brock Lesnar’s re-signing with the WWE.
- Lesnar’s signing in early 2015 was big news as it seemed as though he was going to head back to the UFC. He was in attendance at UFC 184 in Los Angeles. He re-signed with Vince McMahon in LA as the WWE was at the Staples Center at the time. Also in LA at about the same time was Dana White who was promoting the Aldo-McGregor fight.
- The much maligned TNA Wrestling organization was dropped by SpikeTV and then picked up by Destination America. Soon thereafter, Ring of Honor was added to Destination America as a syndicated show for the network. However, it has since moved once again to POP TV.
- Ronda Rousey appeared with The Rock at WrestleMania in Santa Clara, California. The annual event drew in $139 million in economic impact for the Santa Clara/San Francisco region.
- The WWE and TapouT announced a joint venture in which performers would wear the former MMA brand which revamped itself into an athletic performance brand.
- The WWE was one of the many sports leagues to announces a deal with a fantasy sports operator as it announced a deal with DraftKings.
Hulk Hogan banished from WWE as a results of racist comments
Hulk Hogan was terminated by the WWE this past July after audio of a racist rant surfaced. The audio relates to racist remarks he made 9 years ago. It appears that the discovery was made as a result of an ongoing Gawker lawsuit in which the former pro wrestler sued the media outlet for publishing a sex tape. Hogan’s Gawker lawsuit continues into this year as a trial date last summer was continued.
CM Punk sued by WWE physician
UFC contracted fighter CM Punk was sued by a WWE physician for libel. The lawsuit stems from comments Punk made on Colt Cabana’s podcast about the type of medical treatment he received from the doctor while with the company. The podcast was one of the most listened to podcasts from Cabana, who was also named in the lawsuit. A motion to dismiss the case by Punk and Cabana’s lawyers was denied and the lawsuit continues.
More head injury lawsuits filed
The estate of former WWE performer Nelson Lee Frazier sued the WWE for wrongful death as a result of multiple head injuries/concussions while a wrestler with the WWE. Matt Osborne’s estate filed a similar lawsuit. In addition, Billy Jack Haynes,, Vito LoGrasso and Evan Singleton also filed lawsuits related head injuries they claimed they suffered while working in the WWE. The WWE is aggressively defending these lawsuits claiming that they were filed by “ambulance chasing” lawyers. The WWE file motion to transfer the lawsuits to the company’s home state of Connecticut.
In a unique strategy, the WWE filed a lawsuit against several former WWE stars seeking a declaratory judgment against them. The lawsuit would seek a ruling that any allegations of head trauma are “time-barred” by the statute of limitations.
Via our July post:
The WWE strategy is a result of the growing swell of lawsuits filed by former WWE performers claiming that the company knew or should have known about the risks of head trauma and that they suffered injury as a result. Although not a named defendant in the lawsuit, the WWE names (and blames) plaintiff attorney Konstantine Kyros for the litigation. It identifies several notice letters (below) which request that the WWE not destroy any information it may have. The lawsuit identifies the existing lawsuits Kyros has filed on behalf of former WWE stars including Billy Jack Haynes.
The lawsuit requests a court ruling indicating that the defendants’ claims are time-barred by the statutes of limitations/repose under Connecticut law. Essentially, the defendants did not file their claims on time. This is always a very hard issue to consider as most of the claims that wrestlers could make occur when they are still contracted by the company.
The WWE Network
What was once thought as a foolish idea, now reveals that the WWE Network was ahead of the curve with it’s over the top platform. With UFC Fight Pass making efforts to produce more content for its network reflects the fact that digital platforms are not going anywhere. Of course, we don’t think the UFC is going away from its PPV business but its digital service is becoming more of an economic driver for the company.
The WWE Network has kept its strategy of offering a free month for new subscribers in growing its current paid subscribers. Further, the expansion of the network to other countries has helped its subscriber base grow. In January 2015, it surpassed 1 million subscribers.
The fourth quarter has yet to be reported, but through September 2015, the WWE has brought in almost 2.3 million unique subscribers and half of those were active as of September 2015.
October 19, 2015
Last week ESPN announced it entered into a partnership with the WWE to feature weekly segments of wrestling highlights.
The move is thought to help both companies. ESPN’s subscriber numbers and ratings have been down and ad revenue were off based on the last report this past June as reported in the Wall Street Journal. The WWE has had its own issues with viewership of Monday Night Raw hitting record lows. The WWE roster is in flux as they are seeking another top level star aside from Brock Lesnar.
ESPN has dipped its toe into partnering with the WWE in the past with reporting Brock Lesnar’s re-signing with the WWE and coverage of Ronda Rousey’s appearance with The Rock at this past Wrestlemania.
This might receive some criticism from sports purists but the partnership should help both entities. As we noted, the additional mainstream visibility should help WWE with marketing its product. While many people will not admit it, the trickle of pro wrestling into ESPN might bring back some fans that watched it when they were younger. For ESPN, it’s another way to diversify its programming to attract more viewers. It is a move into more entertainment but we’ve seen the network segue into this in the past (recall Rush Limbaugh on the network’s NFL pre-game show) with differing results.
August 23, 2015
While there is a Sunday night UFC Fight Night from Saskatoon, Canada airing on FS1 DSunday night, the event might be overshadowed by WWE’s Summerslam which will air at the same time as the live MMA event on the WWE Network and through PPV.
The WWE has received support in promoting this event from ESPN which is airing live at the Barclay’s Center in Brooklyn, New York where the company is holding three sold out events which started last night with the WWE’s developmental arm NXT holding an event. In addition to Sunday’s Summerslam, the company will air Monday Night Raw from the same venue. Former WWE commentator and current ESPN anchor Jonathan Coachman was a central part of the coverage.
According to Forbes.com, there was some controversy as to whether ESPN should cover the WWE event. However, the company decided to make the decision to cover it for a variety of reasons. Forbes.com touched on the fact that ESPN is losing subscribers and covering the WWE is a way for ESPN to attract more viewers. Earlier this year, ESPN aired Brock Lesnar’s decision as to whether he would sign with the UFC or stick with the WWE. It also produced a documentary featuring WWE superstars.
Strategically the WWE has offered a free month of WWE Network for non-subscribers which should boost viewership. The offer is an almost quarterly strategy to entice curious fans to sign up. As of the last earnings call, it appears that paid subscriptions are doing well and offering the free month is one of the reasons the sub numbers have progressively increased.
This summer, ESPN has done live remotes at unique sporting events across the nation to give little known events some notoriety. This, of course, is a little different. In the past, ESPN has covered Wrestlemania in the past but never in a serious capacity. ESPN’s involvement in covering Summerslam is great for the WWE. In year’s past, the company’s biggest card of the summer was held in Los Angeles but interest had waned. This year appears to have had a resurgence and part of that has to be due to ESPN’s involvement. Brock Lesnar was on the network earlier in the week and you may recall he indicated that Vince McMahon was a better promoter than Dana White.
Based on the attendance from Saturday and the anticipated attendance for the next two events, it appears that the WWE has found a new home for Summerslam.
July 30, 2015
The WWE announced its second quarter earnings on Thursday and the numbers pleased many analysts. The WWE reported net income of $5.1 million ($0.07 per share) compared to a net loss of $14.5 million ($0.19 loss per share) in the second quarter last year.
The WWE reported quarterly revenue of $150.2 million exceeding $1.5 million better than analysts expectations.
The total number of WWE Network subscribers increased 75% from the second quarter in 2014. The WWE Network had 1,156,000 paid subscribers at 2015 2nd quarter end. It is a 31% increase from the first quarter of 2015. The network continues to think of its future plans which includes new content and adding approximately 180 hours of original content by year’s end.
WWE stock has increased 59% since the start of 2015. It closed up $2.88, 17%, to $19.36 on Thursday.
Notable earnings highlights and announcements:
- Live Event revenues decreased 34% to $26.4 million from $40.3 million in the prior year quarter primarily due to the timing of WrestleMania.
- The WWE video game, WWE2K15, has done well. It has assisted in boosting the Consumer Products Division revenues up 36% from $16.0 million to $21.8 million this quarter. Licensing revenues increased 105% from $5.5 million to $11.3 million on the strength of the game based on higher unit sales and effective royalty rates.
- WWE Studios increased slightly from $1.7 million (Q2 in 2014) to $2.1 million this year.
- In enticing fans to subscribe to the WWE, it plans to introduce a 3 month subscription card at retail which would give a “no credit card required” payment option.
- Despite the Network, PPV buys are still solid with an average of approximately 56,000 for the 3 events of the second quarter. Although not considered a PPV, a July 4th live event from Japan, Beast in the East become the most watched program of all-time on the network excluding PPVs.
- Television revenues increased 19% from $43.8 million (Q2 in 2014) to $52.1 million. The revenues do not include the timing of Total Divas which began airing in July.
The one take in comparing the WWE Network from this quarter last year was that the network was only available in the U.S. in July 2014. Now, the WWE has expanded internationally. Still, a bulk of the over 1 million subscribers are in the U.S. The earnings report is a win for the WWE as it appears that its most recent big gamble, the network, is doing well. The big challenge is maintaining and retaining subscribers. There is still a deficit in the amount of investment in the infrastructure of the network lost PPV revenue and TV licensing fees. Yet, the network appears to have caught on.
July 24, 2015
World Wrestling Entertainment has terminated the contract of Hall of Fame wrestler Hulk Hogan. The decision was made based on audio that surfaced from 8 years ago.
Hogan has been wiped from the WWE web site and eliminated from his current position on the USA reality television series “Tough Enough.”
The audio tapes relate to racist comments made by Hogan 8 years ago. The information appears to be a part of sealed information from the pending Gawker lawsuit in which Hogan sued the web site for releasing a sex tape. It would appear that the release of the audio tapes were done as retribution for the lawsuit.
Hogan has released a statement apologizing for the racist comments. The bad news for Hogan is that there are inferences that there is more audio coming out.
Even though many people here are MMA fans, it’s clear that everyone knows Hulk Hogan. This makes the decision by the WWE to immediately distance itself from one of its biggest stars ever more surprising, yet appropriate. As a publicly traded company, the WWE did not want to come under fire for Hogan’s comments and suffer any financial repercussions. While its WWE Network is gaining traction with consumers, it’s still needs to find a way for the investment to break even. Negative publicity like this is not good for business. As for Hogan, his reputation is marred and he joins Bill Cosby as a pop culture figure of the 1980s who we now see in a different light.
Did Gawker have anything to do with the release of these tapes? Not sure. But, it will make the trial between Hogan and Gawker that much more contentious.