March 30, 2015
The WWE announced its network subscription numbers on Monday and Wall Street was unimpressed. The WWE Network surpassed 1.3 million subscribers which is almost double its total from a year ago. The current average is approximately 918,000 paid subscribers through the first quarter of 2015.
The WWE stock dipped during the day on Monday on “confusion over the company’s subscription growth,” according to analyst Laura Martin of Needham & Co. Last year, the company announced WWE Network subscriptions at 667,000. The average is at 918,000 per company press release.
The WWE Network surpassed 1 million subscribers in late January.
As of the time of this writing, WWE stock was rallying in after-hours trading. The 1.3 million subscribers sounds like a good number considering we are over a year in with the platform, but the fluctuations in how many subscribers there are at a current time still remains a source of confusion for investors. Thus, this may be the reason the stock dipped today. The network announced 8 new original series for the network during WrestleMania 31 on Sunday which the company hopes will facilitate consumer retention of the network.
February 25, 2015
The WWE celebrated the one year anniversary of its network on Tuesday by allowing all free access to its network. Variety also posted an article summarizing what the company learned with its over the top network.
Its clear that the Network is inextricably tied with the company’s future financial performance as it is stated in the WWE’s latest earnings report that the company’s future financial performance is dependent on subscription adoption of the WWE Network.
The company surprised analysts by besting Wall Street expectations for the fourth quarter and all of 2014. While the company has incurred a net lost due primarily to the large investment in the network, it has not been as heavy as previously predicted.
As it reported in January, the network surpassed 1 million subscribers and is picking up more viewers as it rolls out in more foreign companies. It has also done well with its promotions for the network including a free November and allowing subscribers to pay mont-to-month rather than establish a 6 month commitment as it was originally rolled out.
Variety cited 4 lessons the WWE has learned since its launch last February. Among the lessons it indicated the “balancing act” the company had with its “direct-to-consumer” initiative while maintaining its partnerships for distribution. Essentially, this means keeping the people paying for its television rights fees happy as while as having amicable relations with the cable and satellite company. The latter being a harder balance considering the company has cut into PPV revenues. It also may have angered companies by playing most of the Royal Rumble last month during an episode of Raw due to the live event cancellation as a result of snow.
The WWE Network has had measured success despite criticism about the product. It may have not met its lofty expectations of subscribers yet but one may have to wait to see how it fares with international distribution. For its part, the WWE has been willing to make changes on the fly to the network (i.e. Free November, month-to-month payment, content, convenient options for viewer usage, etc.) It was a bold move for the WWE to take this step to create the network and the early adopters have spoken. In year 2, we will see if more subscribers add on, or if the Network will face more hurdles for subscribers and retention.
January 27, 2015
The WWE announced that its WWE Network has surpassed 1 million subscribers in just 11 months. Despite early concerns about retaining subscribers, the company has hit a significant benchmark with its digital platform.
The announcement comes a week ahead of its 4th Quarter earnings for 2014. The increase in its subscribers is a dramatic turn from its 3rd Quarter announcement of 731,000 viewers. The WWE offered a free November for potential subscribers to have a chance to check it out. It appears that this promotion, the appearance of “The Rock” and others at the Royal Rumble as well as launching the network in the U.K. and Ireland have helped boost the subscription number.
The results reflect a 37% increase globally and 24% domestically. Despite the buzz that people were going to cancel the network en masse due to the Royal Rumble result, the show actually reflected positive gains.
WWE stock is up 20% on Tuesday at the time of this writing.
Great news for the WWE Network as it is near the 1.4 million subscriber number which would put the WWE investment in the platform at break even. It is behind its projected 1.25 million subscriber number per Dave Meltzer. Yet, with the rumor that it will once again offer a free February and with “Wrestlemania Season” upon us, the subscription number should remain solid for now. The 1 million subscribers could be attributed to the “Free November” which was interesting considering the content during that month was not astounding. MMA Payout will keep you posted on the earnings report next week.
January 9, 2015
In the second half of its third season, WWE Total Divas drew a season high rating average of 1.41 million viewers according to Television By Numbers. The WWE reality show on the E! network received help from the Kardashians.
Total Divas drew a 0.7 rating while it was aided by lead-in Kourtney & Khloe Take the Hamptons which drew 1.836 million viewers and a 0.9 rating. It was the season finale for the Kardashian show. The show which is morphing into its own reality to the annoyance of some WWE fans is building its own audience in addition to WWE followers.
Payout Take: Total Divas did not lose a lot of audience from the Kardashians which is an actual positive sign. Notably, the Kardashian replay which took place after Total Divas drew 806,000 viewers for a 0.4 rating.
December 27, 2014
MMA Fighting reports on Scott Coker’s impressions of the UFC lawsuit as it pertains to how his organization is described in the lawsuit as a “minor league.”
Coker indicated in the article that he had not read the Complaint (we assume the first one filed by Le, Quarry and Fitch but all of them mirror each other) filed by former UFC fighters against Zuffa. Unsurprisingly, Coker does not think that Bellator is a minor league. He did not comment on whether the UFC was a monopoly or his thoughts on the lawsuit. He did indicate that Bellator and parent company Viacom had nothing to do with the lawsuit.
Coker also stated to MMA Fighting that it reached out to Brock Lesnar about fighting with the company. Lesnar’s WWE contract ends after Wrestlemania in March. He also stated that Bellator would be in on “every single major MMA free agent in 2015.” Apparently this also may mean every pro wrestler wanting to be an MMA fighter as it has initiated talks with former WWE star Alberto Del Rio. Del Rio is slated to do some dates with Ring of Honor Wrestling in the new year but Bellator has reached out. The 37 year old Del Rio (real name Jose Rodriguez) has an MMA background including two fights in Pride which includes a loss to Mirko Cro Cop in 2003 per Sherdog. His last MMA fight was in February 2010.
The lawsuit filed against the UFC has to be of interest for Bellator and its own business practices. For the cynical, the fact that Coker did not read the lawsuit or watch the press conference announcing the lawsuit allows him plausible deniability on commenting on his impressions of what was filed and what he thinks becomes of it. Certainly, Bellator lawyers are keeping an eye on the litigation that is evolving in San Jose. Yet, Coker denying that Bellator is “minor league” is not surprising. As the head of the organization, he does not want the company characterized in that way as it sends a message to fighters, sponsors and advertisers.
Will Bellator business come into scrutiny if the UFC lawsuit gets to substantive legal issues? Certainly. But, even before the lawsuit, in January of this year White stressed that Viacom-backed Bellator was a competitor (h/t MMA Junkie). Coker’s comments appear to indirectly support White’s statement here which may be beneficial for Zuffa in the lawsuit.
As for its strategy in 2015 of actively pursuing free agents, looking at a pair of 37 year olds (Lesnar and Del Rio) may not be best for competition but as we are seeing, MMA is moving to more entertainment than pure sport. Bellator’s biggest night occurred with a Tito Ortiz-Stephan Bonnar main event. The UFC recently signed 36 year old CM Punk. Signing Lesnar would be huge for Bellator. Although the former UFC Heavyweight Champ may be past his prime, he is a proven draw. Besides Lesnar and Del Rio, if Bellator can secure quality free agent fighters in addition to “brand name” talent, it can continue to build toward competing with the UFC.
November 29, 2014
The Sports Business Journal revealed its annual reader survey on various topics related to sports business. This year included questions about the UFC, WWE and boxing.
In a survey related to over the top networks, readers indicated that the UFC is the “Fight sport” that will see the biggest growth over the next five years. Of the 684 readers that responded, the UFC garnered 72% while boxing drew 17% and the WWE had 11%.
It also asked readers which over-the-top service was their favorite. Of the 818 responses, NFL Now drew the most votes with only 11%, followed by 120 Sports with 9%, WWE Network with 4% and then UFC Fight Pass with just 1%. Notably, 75% of the respondents stated it did not watch any of them.
On an unrelated, yet interesting note on digital league subscriptions, readers found MLB.tv (22% of the 818 respondents) their favorite followed by NFL Sunday Ticket (18%) with NHL GameCenter Live coming in third (14%). This is interesting considering the NFL usually takes tops with its coverage.
SBJ indicates it has a readership of over 54,000 with many business executives in sports reading the trade publication. The UFC is periodically featured in the publication and the UFC and WWE both advertise in it. Obviously, the survey is not based on anything other than the opinions of the readers. Still, it’s an interesting viewpoint on the business from those that do not closely follow the UFC. With the “growth” aspect, it’s clear that the UFC is moving into more global markets and are forging overseas television deals to advance its product. The WWE is already global and it depends on what organization you look at when looking at boxing. Certainly, Top Rank is trying to tap into the Chinese market. As for the over the top networks, it appears that we are still in the “early adopter” stage for the platform. The WWE has gone all in with its network but the UFC seems to be doing much better with Fight Pass despite the perception from the survey.
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.
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.
May 15, 2014
Variety reports that the WWE has come to terms with NBC Universal and will stay with its USA and SyFy networks. While financial terms have not been disclosed, the decline of its stock price may foreshadow a lower than expected renewal rate.
In after-hours trading Thursday, the stock had fallen almost 24% to $15.50. Of course, this may also be due to the announcement that its WWE Network may not make up lost money from PPV and on-demand revenue until 2015.
Per a WWE press release, the company “reached a multi-year agreement in principle with NBCU for the renewed U.S. licensing of WWE’s flagship programs and ratings juggernauts Raw and SmackDown.”
The announcement that Nikki and Brie Bella would be attending the NBC Universal “up fronts” on Thursday was a sign that the WWE reached an agreement with NBCU for its rights fee deal. However, the deal is likely not what the company had expected.
The WWE wanted $280 million according to Dave Meltzer of The Wrestling Observer in his May 14th podcast. While some analysts had predicted that the WWE doubled its $140 million deal, it was downplayed by the WWE. In its press release announcing the domestic deal, it also announced its work on deals in the U.K., Thailand and its intent to selling its rights in India. This would be something that would not be highlighted if it received a great deal.
The WWE earned $106 million of revenue from domestic broadcast rights in 2013 and $55 million overseas according to the Wall Street Journal.
Based on the recent history of sports deals, including the news earlier this week that the MLS brokered a big deal with ESPN/Fox/Univision for five times the current value of its television deal, the WWE had hoped it would have capitalized on the market.
However, it appears that the WWE overvalued its worth. While it has strong ratings for its RAW and SmackDown brands, its advertising rates were comparatively low. There is also the perception problem. Although revenues have grown since the WWE has gone family friendly from the “Attitude Era” of the 1990s, the mainstream view of professional wrestling remains that it is low class and the choreographed violence is unappealing.
With all the good news of the launch of the WWE Network coinciding with the rise in the WWE stock price exceeding $30 for a brief time, the news of its rights fee deal may cause a short term depression for investors. In fact, the downward spiral in after-hours trading reflects this.
From NBCU’s perspective, renewing the WWE helps the value for the USA Network from a PR standpoint as Raw is one of the top-rated shows on cable. This helps its overall cable ranking. It can promote itself as one of the best in cable even though the WWE may not add much in overall financial value.
It will be interesting to see how WWE stock reacts in the next couple days when financial terms are released.
April 10, 2014
Welcome to a special look at Wrestlemania XXX which took place at the Superdome in New Orleans, Louisiana.
Ultimate Warrior passes away
Perhaps the news of the death of Jim Hellwig (aka The Ultimate Warrior) has overshadowed the post-Wrestlemania news. Hellwig was inducted into the WWE Hall of Fame, made an appearance at Wrestlemania, signed a deal to be an “ambassador” for the WWE and appeared on television on the company’s signature show, Monday Night Raw. News broke late Tuesday night that he passed away in Arizona.
Similar to the passing of Randy Savage, the outpouring of condolences for the death of The Ultimate Warrior likely brought back fond memories of a person’s childhood for many that grew up watching him.
Attendance and gate
According to a WWE press release, it was a sellout with a gate of $10.9 million with 75,167 in attendance. Sunday’s event landed 5th in all-time Wrestlemania attendance.
For those in attendance, it may have been easier for fans to obtain unauthorized WWE merchandise as a Louisiana District Court denied the WWE’s motion to stop and confiscate bootleg merchandise from being sold in the area. An order like this is usually allowed as a way to protect the intellectual property of the company. However, the court decided it could not legally give the WWE this broad authority without identifying these potential infringers more specifically.
Don’t bet on pro wrestling
While we won’t necessarily get into the storylines from the night, it should be noted that The Undertaker’s win streak of 21 consecutive wins at Wrestlemania was broken by former UFC Heavyweight champion Brock Lesnar. While this was scripted, a gambling web site lost money on the fight as it expected that the WWE would not let the Undertaker lose. Fox Sports reported that the odds ranged from 14 to 1 and 8 to 1 for Lesnar to prevail. The maximum bet was $100 although some people were allowed to bet “as much as $500 on Lesnar.”
UFC hypes Lesnar
Not only was Brock Lesnar a part of Wrestlemania, but the UFC took advantage of the hype of the event by having the Rock (below), Jim Ross and Steve Austin talk about the former UFC Heavyweight champion. All of the videos were “Fight Pass Exclusives.”
WWE stock takes a hit
The day after Wrestlemania, the WWE announced its subscribers for the network. To the dismay of investors, it announced it had slightly over 667,000 subscribers which were below Wall Street expectations. While the WWE believes it will hit 1 million by the end of the year (the break-even point for the network), the stock fell almost 20% on Monday. At the end of trading Thursday, it is down to $21.12.
The WWE received a lot of mainstream hype for the 30th edition of the biggest professional wrestling event of the year. Most of this was focused on the new network and how it would fare airing such a heavily watched event. To its credit, the video stream had no noticeable hiccups which were a good sign for the future of the product. The question will be whether the negotiations for its rights deal will be affected in any way.
Payout Take: Although the stock is taking a drop, the broader takeaway from the event was that it did not suffer any tech issues which was a major concern considering the amount of problems it had when it first launched in late February. At least this shows that the product holds up. The next big test for the company is a rights fee deal which is anticipated to occur sometime late April/early May.
April 4, 2014
This past week, the U.S. Supreme Court denied review of a copyright infringement lawsuit from a musician that claimed that Floyd Mayweather, Jr. used a version of his song without his permission at Wrestlemania 24.
By denying musician Anthony Dash’s request for the Court to review his claims, it upholds a ruling that the musician was not able to prove he suffered monetary losses when Mayweather used a version of his song for his entrance music at Wrestlemania 24 in 2008.
The background facts of this case are interesting as Mayweather signed on to do a match at the WWE’s biggest event of the year. It’s fairly common for celebrity guests to make appearances at this event. The contract Mayweather signed with the WWE did not include specifics on what entrance music Mayweather would use. The WWE had communicated to Mayweather that it had selected a 50 Cent song for his entrance. But, the night before the event Mayweather’s manager told the WWE he would enter using another song and represented to the WWE that they had rights to it and granted the WWE the right to use it during his appearance. The entrance music played for 3 minutes as Mayweather came in for his match against The Big Show.
Mayweather used the entrance music at one more WWE event.
Dash claimed that the entrance music played by Mayweather contained his copyrighted instrumental music over lyrics. While he claimed that in 2005 he created the instrumental of the song, he did not file a federal copyright for it until 2009.
The court held that Dash could not prove actual and profit damages claims stemming from the use of his work for entrance music. Specifically, the court was not impressed with the report produced by Dash’s expert claiming that he was entitled to $1,019,226 in actual and profit damages for the infringement at Wrestlemania alone.
Payout Take: The crux of the issue centered on whether the musician could prove damages as a result of the infringement. The report provided by his side appears overblown by just looking at the amount claimed. I am half-joking when I write that the U.S. Supreme Court timed the issuance of this denial of review during “Wrestlemania Week.” The underlying facts of the case are amusing considering the change in entrance music and the subsequent request for over $1 million for 3 minutes of playing a song of a relative unknown musician. With the U.S. Supreme Court finding in his favor, The Money Team gets another win.