The Wrestling Post – 08.13.14

August 13, 2014

Welcome to another edition of The Wrestling Post where we write about the WWE Network launching overseas and the news that tickets demand are lowest in four years for Summerslam.

WWE Network launches overseas

The official launch of the international over the top network went live this week as it was made available in 170 countries outside of the United States.  The hope is that it will pick up much needed subscribers after meager additions after the company’s second quarter.  In addition, in order to entice fans that do not want a longer commitment, it is offering two other tiers of subscription.

Via WWE press release:

The U.S. English language version of WWE Network is now available, on an over-the-top basis, in more than 170 countries and territories, including Australia, New Zealand, Hong Kong, Singapore, Mexico, Spain, and the Nordics, among others. The network is expected to be live in the U.K. by this October and plans for the network in Italy, UAE, Germany, Japan, India, China, Thailand and Malaysia will be communicated at a later date.

For $9.99 (U.S. dollars) per month with a six month commitment, fans have access to 24/7 programming, all 12 live WWE pay-per-view events, and the most comprehensive video-on-demand library. In addition, subscribers can now choose a monthly offering at $12.99 (U.S. dollars) with no commitment and the ability to cancel at any time. The $12.99 price point is a change from the previously announced $19.99 monthly plan and allows WWE to offer an option with no commitment that we believe better reflects the variety of economies that exist internationally.

Payout Take:  We will see how many subscribers latch on to the WWE Network.  Overseas growth had been key in the past for WWE traditional businesses.  Certainly, the WWE hopes that proves the same with its network.

Summerslam Ticket prices lowest in 4 years

In addition to the WWE Network subscriber disappointment, tickets for this Sunday’s big event, Summerslam, ticket demand for this year rivals that of UFC 174.

Via Forbes.com:

According to TiqIQ, the average price for SummerSlam is currently $205.99 with a get-in price of $67, both lows since 2011. Last year the average price was $213.71 with a get-in price of $71. Neither year come close to the peak from 2011 and 2012, which had average prices of $248.31 and $249.64, respectively, with a get-in price of $75.

Payout Take:  Take it for what it’s worth as the article was written by the CEO of TiqIQ and he sources his own company for the ticket information.  Summerslam 2014 is likely not as bad as UFC 174, but if we assume that the ticket demand is down from last year, it reflects a bad spate for the WWE.  Even with Brock Lesnar-John Cena in the main event, the interest appears to be off for this year if we are basing it on the ticket demand.  Due to cost-cutting measures from the expenses incurred from the WWE Network, the WWE did away with its mini-exhibition, Axxess, during Summerslam although it will have a scaled down version.

SBJ reports on WWE Network for OTT feature

August 10, 2014

The Sports Business Journal (subscription required) reported on the WWE’s launch of its network as part of its feature last week on Over The Top (OTT) networks.  The article compliments another within the same issue which talks about the new platform in general.

The article on the WWE reports on the tumultuous time it has had with the launch of the network.  Upon the announcement in January, there was much anticipation.  But, after the initial numbers came out coupled with the general disappointment  the rights fees deal caused the stock to drop and momentum to stop.

The WWE did receive some interesting information from the first few months from subscribers.  Despite being off on its projections, the subscribers that have the network are very satisfied with the network.  Many utilize the network at least once a week.  Also, Xbox and Playstation are the two platforms used by most subscribers.  This last part of information would suggest that a younger demo has purchased the network and maybe not as many older viewers (those that one would presume would subscribe for the older content) have the network.

Payout Perspective:

The overarching theme about OTT is the direct competition it has with traditional platforms.  At this point, OTT does not offer live sports with the exception of the WWE Network.  No big revelation in the article about the WWE.  Although the number of subscribers did not hit its target, the users that have it like it. What may be lacking is the older demo that the WWE thought would have been brought in by the vast WWE library.

WWE reports second quarter earnings, Network sub update

July 31, 2014

WWE announced its 2nd Quarter earnings on Thursday.  The big news was that the WWE Network added just 33,000 subscribers from the 1st Quarter.  In addition, it reported laying off 7% of its work force.

While the number of subscribers is off from the company’s initial projections, the WWE indicated that the existing subscribers are happy with it.  The company indicated that the Network will roll out in its present form internationally.

Similar to how the UFC introduced pricing options for Fight Pass, the WWE will also roll out options to its current payment plans.  Fans can now pay $19.99 per month with no commitment to renew.  This is likely to grab those wanting to order specifically to watch a “PPV” event.  The other new option is that one can pay one time the $9.99 x 6 months.  These two options will be in addition to the current $9.99 per month plan with a 6 month commitment.

The WWE also announced a 10 year deal with Rogers  Communications in Canada for the Network to be a traditional pay-tv option.

Overall, WWE reported a Net loss of $14.5 million, or $0.19 per share compared to last year’s second quarter net income of $5.2 million or $0.07 per share.  The wide swing is due to the costs for the Network.

Payout Take:  WWE stock was up slightly to $12.48 on Thursday.  Unfortunately, when a company cuts jobs, the stock experiences a positive bump due in part to the belief that the company is addressing issues with excess.  The Hartford Courant states that 53 of the 762 positions with the company would be cut.  The article also states that the cuts “along with other efficiencies” should improve the operating income by $30 million (before depreciation and amortization) in 2015.

As for the Network, the number of gained subscribers at this point suggests that it will not reach its targeted goal of 1 million by the end of the year.

The Wrestling Post: Ventura wins defamation case

July 31, 2014

On Tuesday this week, a Minnesota jury found in favor of former governor and professional wrestler Jesse Ventura in a defamation case against the estate of a former Navy SEAL that wrote in his best-selling book about a fight with Ventura.  The jury awarded Ventura $1.8 million.

Ventura won $500,000 for his defamation claim as he denied getting into a fight with Chris Kyle, a former member of the Navy SEALs and elite sniper.  He also won $1.3 million for unjust enrichment.

Essentially, the book, “American Sniper: The Autobiography of the Most Lethal Sniper in U.S. Military History,” written by Kyle included a part wherein he talked about an encounter at a bar in Coronado, California where a “celebrity SEAL” was talking a little too much.  In the book, he was referred to as “Scruff Face.”  Kyle stated that he punched him.  It came out in media interviews promoting the book that the “celebrity SEAL” was Ventura.

Ventura sued in 2012 and continued the suit against the estate of Kyle after Kyle died in a shooting at a Texas firing range. He claimed that the book caused him to lose earnings and alienated him from the SEAL community

Source:  NY Times

As a public figure, the standard for proving defamation is higher than that of a private person.  Ventura is considered as a public figure for a variety of reasons including formerly holding public office, performing as a wrestler and hosting a variety of television shows.

In honor of those that have taken the bar this week, here are the factors for defamation:

  1.  There must be a statement that has been published;
  2. The statement is false; and
  3. The false statement must cause injury.

For a public figure, like Ventura, to win a defamation claim, he must prove that the writer had knowledge that the information was false.

Payout Perspective:

There’s no indication that the estate of Kyle will appeal the ruling. It appears that insurance paid the defense for Kyle’s estate and presumably will pay the verdict.  Ventura states that the jury award will essentially pay off the lawyers.  The jury deliberated several days after closing arguments which some suspected that Ventura had proved his case and it was a matter of how much he would receive.  It would be interesting to know the evidence which showed that the incident retold in the book was false.

The Wrestling Post: Spike TV does not renew TNA Impact Wrestling

July 28, 2014

TMZ Sports first reported that TNA Impact Wrestling on Spike TV will not be renewed by the network.  The company has been with Spike TV since October 2005.

While ratings usually hover around 1.2 million viewers on Thursday nights and once served as lead-in for Bellator, the promotion has fallen on hard times.  Attendance and finances have been the leading causes for the downturn in what is the de facto number 2 professional wrestling company.

According to Dave Meltzer on Sunday night’s Wrestling Observer podcast, the TMZ report has been confirmed by people within TNA.  The current deal runs through October although it’s not clear whether Spike TV will continue to air it through the end of the deal.

Recently, King Mo re-emerged with the organization and it’s not clear whether he will continue on as part-time wrestler, part-time MMA fighter if TNA continues on another network.

Payout Take:  It’s an interesting move on the part of Spike TV to cancel TNA as it does have a following of at least 1 million viewers each week.  Compare that with Bellator ratings and TNA would seemingly be safe on the network.  Perhaps TNA is going a different direction here.  As for TNA, it’s not clear if the company will fold or seek to find another network to air on.  But, if you look at the WWE’s rights fee deal, pro wrestling may not be a burgeoning property in the television industry.

The Wrestling Post – 05.30.14

May 30, 2014

Before we head into one of the bigger combat sports Saturdays in a while, we welcome you to another edition of the Wrestling Post.

In a bit of bad timing for the WWE, this Sunday its Pay Per View event, Payback in Chicago will now go up against Game 7 for the Chicago Blackhawks as it plays the Los Angeles Kings to see who makes it to the Stanley Cup.  The card itself is not that strong and the importance for many Chicago sports fans will be centered around the hockey team.

Also on Sunday will be the Season Finale for Total Divas on E!  In its second season, (and renewed for a third) the episode culminates at Wrestlemania and Daniel Bryan’s wedding.  This season’s average through 10 episodes is slightly over 1.16 million viewers. It’s likely that it will not surpass its first season of almost 1.3 million viewers per episode.  For the second time this season, the episode will run up against its own brand so we might expect a certain segment of fans putting the finale on the DVR.

Regardless of the outcome of the finale, Total Divas has proven to be an asset for the E! network.  According to a recent press release, the network credited Total Divas for its 7% increase across key demos.

Via E! press release:

Returning series Total Divas is one key driver of growth, out-delivering year-ago programming across all key demos by impressive triple digit growth up to +135% in Total Viewers (1.0 Million), +103% in Women 18-34 (252,000), and +142% in Adults 18-49 (628,000).  Total Divas is pacing as E!’s best sophomore original series in two years (since May 2012) and is the network’s second-most watched original program after Keeping Up with the Kardashians.  Total Divas also ranks as a Top 5 ad-supported cable show on Sundays 9pm to 10pm in Women 18-34 (#3) and Adults 18-34 (#5).

Payout Take:  Despite what you may think about the reality show, it has become valuable to the E! network.  Even though there has been a slight decrease in viewership this season, it is doing well with key demos.  In its first season, it was positioned to succeed with a prime spot after its top series, Keeping Up with the Kardashians.  This season has gone without Kim and Chloe as a lead-in but still has produced on one of the busiest nights on television.

WWE in damage control after disappointing TV deal

May 21, 2014

The WWE conducted a special conference call on Monday in order to mitigate some of the damage that occurred with the announcement of its deal with NBC Universal.  Although terms of the deal were not divulged, investors took the news as bad and the stock has tumbled.

The conference call did not reveal anything new except for the fact that WWE CEO Vince McMahon stated he was “a little disappointed” in its new deal with NBC Universal.  He indicated that the deal altogether was “at about $200 million.”  McMahon was frank on the conference call stating that the deal was not what the company wanted or what its researched showed with respect to its domestic television deal.  He also admitted in the Q&A portion that launching the WWE Network had a negative impact on negotiating its TV rights deal.

One of the takeaways here is that the WWE may have underestimated the impact the loss of its PPV revenue may have on its core business.

It still projects that it will have 1 million network subscribers at the end of 2014 and the possibility of 2 to 2.5 million subscribers at the end of 2015.  With the subscriber projection of 1 million at the end of 2014, it would have an estimated 2014 OIBDA (Operating Income Before Depreciation and Amortization) loss of $40 million for the network alone and $35-$45 million for WWE.  If the WWE achieves its 2 to 2.5 million subscribers number by the end of 2015 it will have turned around the loss to an OIBDA of $105 million to $160 million for the network and $125 million to $200 million for WWE.

Despite the promising outlook, investors are not happy right now.   Marketwatch reports that the Former Attorney General of Louisiana has commenced an investigation into the WWE.  The crux of the investigation will seek “whether WWE and/or its officers and directors violated state or federal securities laws.”

Unless the investigation produces material information that the officers and directors knew that it was misleading investors, it’s unlikely that the investigation would produce much.  McMahon alluded to the fact that the company’s research reflected the fact that a TV rights deal could garner double the WWE’s current deal.  Obviously, if the research was flawed and/or not sound in its conclusions, there may be an issue.  But, I would not suspect any criminal or civil penalties as a result of a disappointint TV deal.

Payout Perspective:

Monday’s Business Outlook Conference Call was a way for the WWE to calm its investors.  But the conference call probably did not make any holder of the stock happy considering McMahon expressed his own dismay on the new deal.  Earlier this year, the rights fee deal was thought to be a big boon for the company based on other sports’ rights deals such as NASCAR, but  it did not come to fruition.  Based on the huge hit the WWE took after news of its domestic television deal and the news that PPV revenue will contribute more than expected to the company’s losses, many investors are cutting their losses.  The steep decline in stock price caused an investigation and the possibility that executives will be removed to satiate angry stockholders that saw their portfolio take a huge hit.

Just a few months ago, the WWE stock was trading above $30 and now (at the time of this writing) it’s trading below $11.  The stock has been downgraded by analysts which can’t help foster confidence right now.  Now, analysts will take aim at its network to see if the company can come through with its projections.

The Wrestling Post – 04.18.14

April 18, 2014

Welcome to another edition of The Wrestling Post.  In this edition we write about a new PPV announced, DirecTV plays hard ball and the latest ratings from Total Divas.

Ring of Honor tries PPV Sunday June 22nd

This week Ring of Honor announced that it would be holding its first PPV ever for the company Sunday, June 22nd.

Notably, the ROH PPV is the same weekend as Glory’s first PPV and a week after TNA Wrestling’s PPV, Slammiversary.  ROH had previously put on iPPVs with some noted difficulties.

The Sinclair Broadcasting-owned ROH have expanded its reach with its weekly show as more affiliates carry ROH.  Of course, it’s at 1:00 am on Friday night here in Seattle so you can still DVR the show. Hopefully promotion of the PPV will attract fans to buy the PPV.

Payout Take:  The PPV can be seen as ROH capitalizing on the WWE popularity and its champion – Daniel Bryan worked Ring of Honor for some time.  104,000 buys is the unofficial number of ECW’s very first PPV – Barely Legal in 1997.  We shall see if ROH can do better in 2014.  ROH has more financial backing and should put on more of a polished product.  Obviously PPV has evolved since the late 1990s and we will see which satellite/cable companies pick up the PPV but it will be an interesting comparison.

DirecTV drops WWE PPVs

Earlier this week, DirecTV announced that it would no longer offer WWE PPVs to its subscribers per PW Torch.  WWE did release a statement acknowledging the move by the satellite company.  “Yes, DIRECTV has decided to stop offering our PPV’s residentially and commercially. The only other option would be to work through the local cable provider.”

DirecTV did leave an out that it may return to carrying WWE PPVs.  You may recall that the Dish Network first announced that it would no longer carry the company’s PPVs since it launched its digital network.  However, the distributor changed its mind and carried Wrestlemania XXX.  The domestic buys for Wrestlemania XXX, the first PPV carried on the WWE Network, drew 400,000 purchases.

Payout Take:  While the WWE is hoping for the success of its network, it still seeks its distributors to continue to carry its PPV.  Distributors such as DTV and Dish saw this as a direct hit against its profits from the WWE PPVs.  We all knew that the WWE Network would cannibalize its PPV profits but would benefit the WWE bottom line in the long run.  We will see whether DTV stands it ground. It has played hard ball in the past.  One need only look at the acrimonious negotiations between DTV and the Pac 12 Network and The Weather Channel to see it doesn’t back down.

Total Divas ratings

Episode 4 for the second season of Total Divas on E! scored 1.164 million viewers for a 0.5 rating among adults 18-49 according to Television By Numbers.   The episode was the first in two weeks having taken off for Wrestlemania XXX Sunday.

The 1.164 million is the second-lowest rating this season for the reality show.  This season’s average is at 1.26 million viewers.

McMahon featured in Forbes

March 26, 2014

Forbes.com posted an article which features WWE chairman and CEO Vince McMahon.  The article boasts the achievements of McMahon while cautioning about the risks of the WWE Network.

The article, written by Lifestyle editor Michael Solomon, is an overall positive piece on the McMahon success story.  The piece highlights the company’s big investment in the network which is underscored by the fact that revenues “have barely budged (remaining at $500 million since 08) over the last few years.”  This may be due to the $75 million it has reportedly spent on setting up the WWE Network.  It also writes about the company’s failed attempt to establish its network as a “premium” channel to be distributed on the network. The Forbes.com piece spins this in the positive for the WWE and mostly everyone has bought into the“over the top” strategy of the network.

As it is currently set up, the network needs 1 million subscribers to break even.  At 2 million subscribers, it projects adding $50 million to its EBITDA.  The first numbers on the network will come out after Wrestlemania.

Due to the network, the WWE has cannibalized its PPV business which will change how the company will do business.  The shift has drawn the ire of DirecTV and Dish Network.  DirecTV had some harsh words for the WWE and Dish Network actually told its subscribers that it would not carry Wrestlemania XXX this April 6th.  However, it has since backtracked on its stance and will now carry the show.

The article will be published in the print edition of Forbes the week leading up to Wrestlemania Sunday giving it a prime PR piece leading up to its biggest event of the year.

Quick strikes…

Television by Numbers reports the second episode of Total Divas (9pm ET/6pm PT) scored a viewer average of 1.28 million viewers on Sunday night.  Thus, it did better than the last hour (936K average) of UFC Fight Night 36 although the last quarter hour featuring Rua-Hendo did 1.25 million.

Last week the WWE and Mattel, Inc. announced new kids property called WWE Slam City.  In addition to merchandise, the WWE has launched a series featuring WWE characters which appears on WWESlamCity.com, YouTube and its Network. The obvious hope is that this property will facilitate continued growth in its consumer products division.

The Wrestling Post – WWE hits all-time stock high and its CEO is worth $1B

March 5, 2014

Welcome to another edition of The Wrestling Post.  In this post we look at WWE stock, the net worth of Vince McMahon and a move in programming for the WWE Network.

WWE Stock at all-time high

Despite the rocky start to its network launch, WWE stock is trading at an all-time high.  The stock price went up as high as $27.43 on Wednesday and was at $27.10 in after-hours trading.

Payout Take:  The buzz around the WWE Network and the anticipated media rights deal has investors seeing value in the company.  There are some that have been displeased with the network due to the many glitches during the first week but the WWE has done a good job in quelling the uprising of negative reviews and for the most part the tech issues have been addressed.  This spring will be the biggest in the company’s history as its rights fee deal will likely occur sometime in April and it will reveal the first set of subscriptions numbers for the network.  Both will be key indicators for the stock in 2014.

Vince McMahon is a billionaire

Forbes.com came out with a list of “notable newcomers” of billionaires based on net worth for 2014.  WWE CEO Vince McMahon made the list with a net worth of $1.2 billion.  Forbes.com describes McMahon’s source of wealth as the WWE and states, “…transformed the World Wrestling Federation from a regional operation into an international phenomenon.  WWE went public in 1999 and today its programs are broadcast in nearly 150 countries and more than 30 languages.”  McMahon returns to the list as his net worth had dipped in 2012-2013.

Other newcomers to the billionaire club include Michael Kors, Drew Houston (Dropbox founder) and Brian Acton (WhatsApp founder who was turned down by Facebook for a job. Four years later Facebook paid him $3 billion for his company).

Payout Take:  With the WWE’s stock at all-time highs, the hopes of the potential Network revenues and an anticipated rights fee deal this spring that should double (if not more), McMahon’s wealth will only go up in the near future.

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