Jim Ross opines on future of Fight Pass/WWEN

October 20, 2014

Former WWE color commentator Jim Ross had some interesting comments about the future of UFC Fight Pass as he seemed rather bullish on the future of the over the top model.  The comments come at a time when online services seem to be on the rise…or maybe on the decline depending on what you read.

In an interview with Bloody Elbow, Ross was quoted that the shift for companies such as the UFC and WWE to digital networks is a thing of the future.  Despite the rocky starts for each, he believes that it is a “genius-like maneuver.”

With last week’s announcements that HBO and CBS were offering online services and ESPN providing a streaming-only service for NBA content the week before, it’s apparent that over the top (OTT) network offerings are the growing trend.  But, is there enough of a market for them? Although the model seems to be geared toward cord cutters, it would seem that the addition of so many subscription services would negate any savings from cancelling a traditional cable package? Would it impact ad revenue?

Payout Perspective:

The WWE will make its quarterly earnings call on October 30th and we will see how much of a dent it has made in its goal of 1 million subscribers to its OTT WWE Network.  You may recall it made a meager increase in its goal last quarter.  The last report this summer indicated that it had added just 33,000 subscribers for approximately 700,000 total subscribers.  Even with the addition of an international market, it is unlikely that the 1 million goal could be met. This should be something that other OTT subscription services should take notice.

On the other hand, all reports suggest that the UFC Fight Pass is doing well (although no numbers have been revealed).  But, unlike the WWE, it keeps its PPVs separate from the network.  Fight Pass is geared for the hardcore fan and it would be hard to argue that it takes away from the UFC’s PPV buy rate.  While Fight Pass offers an extensive fight library and live fights from overseas, most of the marquee names and match-ups remain on PPV.

So, will digital networks like the WWE Network and UFC Fight Pass thrive in the future?  Perhaps for the young, cost-conscious consumer that is savvy enough to deal with the online world but do not want to be tied down with a traditional cable package.  But, it’s unlikely to take over.

WWE announces ads on network

October 13, 2014

The WWE announced today that it is beginning to run limited video advertisents on its WWE Network.  The subscription-based over the top network is seeking additional ways to monetize the product and the ads are a way that my aid the lagging subscriber numbers.

An email was sent to WWE subscribers today advising of the ads.  It gave specifics:

• No commercial breaks during scheduled programming
• Limited advertising between shows
• Occasional advertising before our video-on-demand content

Ad Age reports that Pepsi, Mattel and Kmart are signed on for the display of ads on the WWE Network.  The report indicates that media buyers are questioning the placement of ads on the network.  While the ads may reach an audience of young males, there is skepticism about the growth of subscribers leaving some potential advertisers wondering if it would be more prudent to advertise on the WWE’s network shows.

Payout Take:

The ad announcement will be interesting to see in terms of its success and how many advertisers decide to sign on with the network.  Certainly, ads would be something that UFC Fight Pass might entertain in the future.  But, there may be concern that advertisers would annoy subscribers.

The Wrestling Post – 09.21.14

September 21, 2014

Welcome to another edition of The Wrestling Post.  In this post we’ll catch up on Total Divas ratings and the WWE brokers a new television deal in Latin America.

Total Divas Ratings –Season 3, episode 2

The second episode of the third season of Total Divas did just 974,000 viewers with a 0.5 rating.  It’s a decrease from the debut episode for the third season which drew 1.2 million viewers.

Payout Take:  Without a Kardashians lead-in on the E! Network, Total Divas is finding it hard to grab its own audience.  It also doesn’t help that it is up against the NFL and other must see Sunday night television.  Don’t expect a huge uptick this Sunday as it goes up against a WWE live event on the network.

WWE and Fox Sports Latin America announce 5 year pact

Earlier this week, the WWE announced a deal with Fox Sports Latin America.  The 5 year deal includes Fox Sports Premium platforms across all of Latin America which will make WWE programming available in 56 million homes.  The deal begins October 6th with WWE airing Monday Night Raw across the Fox networks.

Payout Take:  The move into countries like Mexico, Brazil, Argentina, Columbia and Venezuela will help with its global footprint.  It will also help with the future proliferation of the WWE Network.

Ross and Sonnen chosen as broadcast team for Battlegrounds MMA PPV

September 4, 2014

Former WWE broadcaster Jim Ross and Chael Sonnen will be calling the live PPV telecast of Battlegrounds MMA from Tulsa, Oklahoma on October 3rd.  The PPV is $19.95 in the U.S. and Canada.

Via BattleGrounds MMA press release:

Two consummate performers in WWE Hall of Famer Jim Ross and recently retired UFC superstar Chael Sonnen have teamed up to form what is bound to be one of the most memorable commentary teams in sports entertainment history, and will call the world-class Mixed Martial Arts (MMA) action on the LIVE pay-per-view telecast of BattleGrounds MMA: ‘O.N.E.’ from BOK Center in Tulsa, Oka. on Friday, October 3.

Headlined by the first one-night, eight-man tournament in Tulsa since UFC 4 in 1994, BattleGrounds MMA: ‘O.N.E.’ will award its welterweight (170 pounds) winner a grand prize of $50,000.

BattleGrounds MMA ‘O.N.E.’ will be distributed at a price point of $19.95 in the United States and Canada by Integrated Sports Media for live viewing, beginning at10 p.m. EST/7 p.m. PST on October 3 on both cable and satellite pay-per-view carriers iN DEMAND, DirecTV, DISH and Avail-TVN in the United States and Bell TV in Canada.  A pre-show will begin at 9 p.m. EST/6 p.m. PST.

“As a longtime fan of MMA, to be asked to call the fights for the BattleGrounds MMA event is amazingly exciting for me,” said Ross, a 2007 WWE Hall of Fame inductee.  From commentator to referee to executive and even occasional wrestler, Ross has played a multitude of roles for the world’s leading professional wrestling league.

“I’ve broadcast NFL and XFL games,” continued Ross, “FOX Sports boxing and WWE action, but MMA is a new adventure and one that I’m enormously excited about contributing to. To launch this phase of my broadcasting career in my home state, and with Chael Sonnen at cageside makes it an ideal opportunity and a bucket list experience.

“This is going to be a TV event that any MMA fan won’t want to miss,” said Sonnen, who recently retired from the sport that he competed in as a professional since 1997.  A three-time UFC championship challenger, Sonnen fought his last 11 career bouts inside The Octagon and enjoyed a stint as an analyst for FOX Sports Network.  “I am thrilled to be working with a legend like Jim Ross and, together, we are going to make the BattleGrounds MMA event one of the most exciting extravaganzas in combat sports history.”

Payout Perspective:

The card features a one night tournament featuring eight welterweights including former UFC fighters Cody McKenzie, Brock Larson and Luigi Fiorvanti.   Obviously the selling point is Ross and Sonnen as the announce team rather than the actual card.  It will be interesting to see how many buys this drums up for the organization.  One has to think that this has to be a “break even” situation for the company in hopes of future success.

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 – 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.

WWE reports 2014 Q1 Earnings

May 2, 2014

On Thursday, the WWE announced its First Quarter earnings for 2014.  Despite a loss of $8 million ($0.11 per share) due to the WWE Network, it beat analyst expectations by 0.05.

This quarter in 2013, the WWE saw net income of $3.0 million or $0.04 per share.

The most notable news was the lack of news on a new domestic rights TV deal which was initially thought to be completed by late-April or early May.  Yet, there was no word on the status.

The WWE reported that despite the $4.4 million of network subscription revenue (based on 495,000 subscribers at quarter’s end), it was partially offset by $1.3 million decline in pay-per-view revenue.  Notably, Wrestlemania XXX was not factored into these numbers.  Here, we see the obvious cannibalization of its product. The announcements by DirecTV and Dish Network that it would not carry this Sunday’s PPV are a looming threat to the PPV revenue.  The concerns would be whether purchasers of the WWE PPVs could transfer to the WWE Network to view the PPVs and how much more PPV revenue could it lose if big distributors refuse to air its PPVs.

It reiterated its belief that it would have 1 million subscribers by the end of the year.  It also believed its expansion of the network to more platforms (e.g. Xbox One) and international markets will provide long-term growth over time.

WWE stock finished up 4% slightly over $20 for Thursday but is off 7% as of this writing on Friday.

Payout Perspective:

There was nothing earth-shattering about the losses as most knew that the WWE would be reporting this due to the Network expenses.  The lack of news of a new domestic rights TV deal is hard to read.  It could be good news or bad news.  Based on the stock price, it appears that investors are taking this as bad news. The Network remains the big news this quarter.  While Wrestlemania viewership on the Network and PPV did over 1 million viewers, we may not see these types of combined numbers again.  The news that distributors are beginning to backlash against the WWE for its Network is something to keep an eye on the rest of this year.

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