Gawker-Hogan talk settlement of jury award

August 8, 2016

The Wall Street Journal reports that Gawker and Hulk Hogan are in settlement discussions over Hogan’s huge trial victory which caused the personal bankruptcy of Nick Denton.

It was anticipated that A.J. Daulerio was to file for personal bankruptcy as well.

In March, a Florida jury awarded Hogan $140.1 million including $25.1 million in punitive damages.  Despite the fact that the judge presiding over the jury trial advised the jury to not award punitive damages that would bankrupt the defendants.  Nevertheless, the jury awarded the damages to the former pro-wrestler.  The court determined that Gawker had $48.7 million in gross revenues las year and a net worth of $83 million.

Although Gawker is appealing the trial court decision, that would not stop Gawker’s Chapter 11 bankruptcy proceeding.  The company filed for protection when the trial court judge upheld the jury verdict this past May.

Denton listed his stake in Gawker and his apartment in Manhattan as his only two assets.  The combined value he estimates is less than $50 million.

Payout Perspective:

While the settlement discussions have been ongoing, they have led to nowhere.  One would think that Hogan might take less than the jury award to cut off the constant waterfall of legal fees that he will surely have to pay at some point.  For Gawker, settlement would not stop a bankruptcy auction of the company.  But, it could mean that they would have money left over after the sale.

Lawsuit over WWE Network royalties promptly dropped by former wrestler

April 12, 2016

Former WWE wrestler Rene Goguen (fka Rene Dupree) has voluntarily dismissed his lawsuit against World Wrestling Entertainment.  The news comes just days after announcing it filed a class action lawsuit against the company for unpaid royalties related to the WWE Network and Netflix.

Goguen claimed breach of contract, breach of fiduciary duty, unjust enrichment and violation of the Connecticut Unfair Trade Practices Act.  The dispute arose out of what Goguen and his attorneys believed were a part of his Booking Contract that he was due royalties for “technology not yet created.”

WWE attorney Jerry McDevitt stated that Goguen signed a contract in 2011 “that destroys his ability to bring these types of claims” according to The Hollywood Reporter.  Aside from the contract, THR pointed to a case which states that state-based rights of publicity are trumped by the federal copyright act.

Goguen Dismissal

Payout Perspective:

The voluntary dismissal obviously means that Goguen’s attorney realized that they did not have a legal shot at surviving a motion to dismiss.  This probably stems from the contract alluded to by McDevitt.  It likely was a waiver of claims related to the WWE Network and Netflix.  One might infer that when the WWE contemplated the Network, ensuring that all performers under contract pre-network would not be able to claim royalties was a necessity to mitigate these types of claims.  The WWE’s lawyers are very aggressive when it comes to legal strategy and one might surmise that the WWE would have sought legal fees from plaintiffs’ attorneys.

Former WWE wrestler sues over royalties from WWE Network

April 8, 2016

Former WWE wrestler Rene Goguen (wrestling under the name Rene Dupree) sued the WWE Wednesday in a class action lawsuit filed in Connecticut federal court.   The former WWE superstar is claiming he is owed royalties from the WWE Network and Netflix due to a clause in his contract which pre-dated the over the top platforms but stated he was entitled to royalties of “technology not yet created.”

Goguen is claiming breach of contract for failing to pay royalties, breach of fiduciary duty, unjust enrichment and violation of Connecticut Unfair Trade Practices Act.

Goguen believes his Booking Contract, which was attached to his Complaint, entitled him to WWE Network and Netflix licensee sales of WWE Video Products due to a vague clause which left open for him to be entitled to royalties for “technology not yet created.”  He claims he was not paid these royalties.

The WWE told the Hollywood Reporter that Goguen signed a contract in 2011 that negates his ability to bring his claims.

Payout Perspective:

In all likelihood, the WWE will attempt to dismiss this case.  If the WWE is correct, we might assume that Goguen signed an agreement that precluded him from filing this type of lawsuit as the WWE probably contemplated the clause might open itself up to royalties.  The 2011 contract referred to by the WWE likely indicated he would not be entitled to any network royalties or any from WWE content on Netflix.  The bigger issue might be how the WWE splits royalties among its current roster for the network.  When C.M. Punk left, he claimed that many wrestlers did not know how the WWE would address royalties in light of the fact that some wrestlers made points off of PPV buys.  With the almost extinction of PPV, its clear that royalties from the WWE would be big for wrestlers.  We will see how Goguen’s case is handled and whether this raises any issues for WWE contracts moving forward.

WWE Network subscriptions set records for WM 32

April 4, 2016

The WWE announced a couple records related to Wrestlemania 32 Sunday.  On Monday, it announced that the WWE Network reached 1.82 million total network subscribers according to a telephone conference held by the company.

WWE Network reached 1.39 million total domestic subscribers and 434,000 international subscribers.  The gains over last year at this time (the day after Wrestlemania) improved by 39% and a gain of 1.3 million subscribers at the end of the fourth quarter of 2015.

In addition, the WWE announced that Wrestlemania 32 set a new attendance record of 101,763 at AT&T Stadium in Dallas.  The previous Wrestlemania record was at the famous Wrestlemania 3 in 1987 which drew 93,173 for Andre the Giant vs. Hulk Hogan.  Obviously, there is some skepticism about these numbers.

While stock shares were up slightly on Monday, there was a sharp decrease in shares with the stock down 7.3% at one time after the WWE telephone conference announcing the subscription number Monday afternoon.

During the telephone conference, a question was asked about subscriber “churn” with the network.  The response was that more content would help with retention of subscribers.  Although questioned, the WWE did not comment on the conversion rate of its free trial promotions.  The company had released retention rates for its first two trials but have not provided information since.

Payout Take:

It’s important to note that the 1.82 million subscribers announced includes paid and those on a free trial.  The actual total paid is 1.454 million.  The company has embraced the free month models for a variety of reasons although it has its obvious risks.  The paid subscription numbers must have disappointed investors (or people selling off the stock) as WWE shares were down after the telephone conference.  It did rebound in after-hours training.  We will see how the stock does in the next couple days.

Jury awards Hogan additional $25.1 million in punitive damages

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

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.

Payout Perspective:

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.

The Wrestling Post – Ross replaces Ranallo as New Japan announcer

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.

2015: The year in pro wrestling

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.

Q1: 918,000

Q2: 1,156,000

Q3: 1,173,000

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.

Judge denies motion to dismiss in Punk libel lawsuit

July 22, 2015

The Washington Post reports that the lawsuit between WWE doctor Chris Amman and CM Punk and Colt Cabana will continue after a Cook County (IL) Circuit Court judge denied defendants’ motion to dismiss the case.

As a result of the court’s denial to dismiss the case, CM Punk and Colt Cabana must answer Amann’s complaint claiming that the two libeled the WWE doctor during an episode of Cabana’s podcast.

On the Art of Wrestling podcast, Punk called into question Dr. Amann’s treatment of his concussion and an injury on his back with was diagnosed as a MRSA staph infection.  Cabana is being implicated for being the host of the podcast.  He is also a good friend of the now UFC fighter.

The WWE aided Dr. Amann despite not being a party to the lawsuit as it sent out a statement regarding the lawsuit and providing video purported evidence that Punk did not have a lump on his back.

Payout Perspective:

Procedurally, a motion to dismiss the lawsuit prior to answering the claims in a complaint is necessary and occurs when the one being sued believes that there is no merit to the claims.  Here, Punk and Cabana took their shot at dismissing the lawsuit.  But, there was a sufficient amount of information pled by Dr. Amman according to the court.  Its likely Punk and Cabana will deny the allegations in the Complaint when they file an Answer and we may see prolonged litigation.

The Wrestling Post – 06.02.15

June 2, 2015

Welcome back to another edition of The Wrestling Post.  This time around we take at the WWE Network offering another free month and the uncertainty of the status of TNA Wrestling.

WWE offers another free month on its Network

With the success of recruiting and retaining more network subscribers through its “free” network months, the WWE has added another free month of June for non-subscribers.  It just came off a “free” month of May which culminated in a special live show.

Payout Take:  There is no initial reason given for the second consecutive month of the “free” Network offer.  We can’t read into anything but from the past indicators, the WWE has been able to collect a fair number of new paid subscribers from its free promotion.  Thus, when people sign up for the free month, they tend to stay on and pay the following month instead of cancelling after the free month is up.  The one question is whether the “free” month will be a mainstay for the network.  It appears that the this strategy is the “go to” move to boost subscribers.  We shall see if this means another improvement with its overall subscription numbers when it makes another announcement after the end of the second quarter.

Ring of Honor now on Destination America; TNA status in jeopardy

In what was a newsworthy week last week for the Discovery Network’s offshoot, Destination America, it was announced that wrestling promotion Ring of Honor will air on the network starting Wednesday, June 3rd.  The interesting part about this situation is that the ROH announcement came after news that Destination America would not renew TNA Wrestling next year.  The Wrestling Observer first reported the news that TNA Wrestling would be not renewed as Dave Meltzer obtained an internal memo from Destination America indicating that the promotion would not be renewed.  TNA Wrestling is being moved from Friday to Wednesday and will now serve as the lead-in for ROH.  While there was the possibility that Destination America could have changed its mind if TNA ratings skyrocketed on Wednesday nights, the ROH announcement makes it highly unlikely TNA will be back on Destination America once its contract ends this year.   The station had an “out clause” at the end of the current TV season according to The Wrestling Observer.

Ring of Honor programming is currently available regionally via the Sinclair Broadcast Group. The Destination America deal is great for the promotion since it gives them national exposure and taps into markets that it could not reach with Sinclair.  According to The Wrestling Observer, the deal with ROH will only go through December 2, 2015 so we may see more movement from Destination America this year.

Payout Take:   Regardless of the semantics (cancelled vs. not renewed), Destination America made the decision that the production costs of carrying TNA Wrestling outweighed the ratings (and ad revenue) it received from the program.  Ring of Honor is a cheaper alternative for Destination America since it will not be paying for production costs for ROH.  Wednesday will be filled with wrestling as it joins Lucha Underground and NXT with live wrestling that night.

WWE Q1 2015 results

April 30, 2015

The WWE announced its results for the first quarter of 2015.  In a release from the company, it stated that revenues increased 40% to $176.2 million which is the highest quarterly revenue in WWE history.  The results exceeded analyst expectations for the company.

After five consecutive quarters in the red, it’s the first quarter where the WWE has shown a positive operating income.  As for the WWE Network, it reached 1.3 million total subscribers, a benchmark it announced the day after Wrestlemania.  The WWE reports that its average of network subscribers is at 927,000 at the end of the first quarter.  Again, the network’s free promotion, which was February this quarter, contributed to the Network’s growth as 154,000 subscribers converted from free to paid subscribers.

For its quarter ending March 31, 2015, it reported net income of $9.8 million ($0.13 per share) as compared to a net loss of $8.0 million ($0.11 per share) in the first quarter last year.

According to Chief Strategy & Financial Officer George Barrios the positive financial results were “driven primarily by the escalation of our [WWE] television rights fees and the expansion of the WWE Network subscribers.”

The WWE indicated that it will implement a five-part strategy the rest of 2015 for the Network.  This includes 1) creating new content; 2) implementing high impact customer acquisition and retention programs; 3) introducing new features; 4) expanding distribution platforms, and 5) entering new geographies.

As for the rest of WWE business, each division, except WWE Studios ($1.5M vs. $4.3M) is up over this quarter last year.  The total net revenues for this quarter were $176.2 as compared to $125.6 at the end of the quarter for 2014.  The Network segment, which includes revenue generated from Network and PPV increased $19.2 million from the prior year quarter.  The Network alone generated $28.6 million in revenue based on an average of 927,000 paid subscribers.

At the time of this writing, WWE stock is down slightly at $14.16 per share.

Payout Perspective:

A good quarter for the WWE.  Beating the analyst expectations is a good achievement by the company.  Wrestlemania was the likely key driver here especially when you look at the number of converted free to paid subscribers going into March, which was Wrestlemania month.  Of course, we do not know how many dropped the network in April.  We will see if the WWE can continue its positive momentum and see if its strategy for the network continues to net subscribers.

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