August 19, 2015
Brock Lesnar is making the rounds on behalf of the WWE as it promotes the company’s second-biggest event of the year, Summerslam, at the Barclay’s Center in Brooklyn, New York. The biggest news to come out of Lesnar’s appearance was his comments that Vince McMahon is a better promoter than Dana White.
The statement itself is not that controversial. The 38-year-old Lesnar signed a lucrative deal with the WWE and as he said he upon announcing the re-signing with the WWE he gets paid full-time for working part-time. So, for him to take the side of the WWE is not that extraordinary.
But the reason for the question by ESPN was based on a twitter back and forth between Dana White and a fan in which White stated that wrestling is “fake.” Well, of course it is. And there’s no dispute there. Yet, we should probably go all the way back to the source for the response: some guy on twitter. The question asked by the guy to White is to whether UFC PPVs should be priced at $9.99 like WWE PPVs.
@RKORollins I hear u bro but fake shit should be 9.99
— Dana White (@danawhite) August 1, 2015
Obviously the second half of the tweet may be tongue in cheek as both White and twitter guy know its fake.
One might assume the question was based on whether the UFC should go to the WWE model of placing its PPVs on Fight Pass like the WWE has done or whether the UFC should charge its fans a discounted rate for PPVs that do not have big stars appearing on them.
White told the twitter follower that wrestling is “fake” and one might read into that response that based on its scripted finish the price point should reflect accordingly. Still, the back and forth seems rather innocuous.
As with most of White’s tweets, it did not go unnoticed. WWE Champion Seth Rollins chimed in with a response to White’s “fake” comments.
Guys, cut @danawhite some slack. I mean he’s had a million matches, so his opinion is super valid and should be taken as gospel.
— Seth Rollins (@WWERollins) August 2, 2015
Fast forward to yesterday in which ESPN hosted Lesnar. The question which got MMA web sites to sit up at their keyboards and take notice was the now infamous White tweet that wrestling is fake. Lesnar responded with perhaps an honest response in stating that McMahon is a better promoter than Dana White and explained the differences between UFC and WWE.
I would argue that the UFC and WWE business models are similar but not the same. It’s clear that the WWE has taken a big step with its WWE Network as opposed to what the UFC is doing with Fight Pass. The WWE received steep criticism from the outset with its plan as it essentially invested heavily into the over the top network while planning on moving its PPVs to the platform. Not only did this deteriorate its PPV business, it put off its previous distributing partners that received a revenue split from the PPVs. The distributors still receive a PPV cut, but it is less than before.
The question about whether UFC PPVs should be $9.99 needs to be addressed because it’s such an illogical question from the start. The UFC business model is predicated on the success of its PPVs. While the company receives revenue from event gates, merchandise and Fight Pass subscriptions among other revenue streams, PPVs remains one of the biggest pieces of the UFC financial pie. Starting this year, it increased its PPV price point $5 to $59.99 which likely meant an increase in PPV revenue. To suggest it cut UFC PPVs by $50 so more people can afford it seems way off the business model. Yet, it’s not wrong for someone on twitter to ask. And perhaps White’s response was appropriate as he was making the point that its business of real fighting is different from the WWE’s.
But, as with anything on twitter, it exploded into more. While most web sites, including this one, are picking up Lesnar’s comments, the underlying cause for the news is predicated on non-news. A question from someone on twitter that escalated. It’s an obvious commentary on the state of what is news nowadays.
ESPN picked up the twitter back and forth from White and asked Lesnar. Thus, what was an innocuous question about lowering PPV prices turned into Lesnar calling out White on ESPN. Of course, just a few months ago, Lesnar showed up in LA at UFC 184 with White and entertained thoughts of going back to the UFC. So, it’s unknown how personal White will take the slight. In the past, McMahon has taken swipes at the UFC with no response by White. One might expect nothing more to come of this since the WWE would like to have Ronda Rousey make another appearance at next year’s Wrestlemania in Dallas. Thus, a working relationship between the two companies is warranted for that to happen.
But then again, someone might ask another question of White on twitter which may once again be blown out of proportion.
July 30, 2015
The WWE announced its second quarter earnings on Thursday and the numbers pleased many analysts. The WWE reported net income of $5.1 million ($0.07 per share) compared to a net loss of $14.5 million ($0.19 loss per share) in the second quarter last year.
The WWE reported quarterly revenue of $150.2 million exceeding $1.5 million better than analysts expectations.
The total number of WWE Network subscribers increased 75% from the second quarter in 2014. The WWE Network had 1,156,000 paid subscribers at 2015 2nd quarter end. It is a 31% increase from the first quarter of 2015. The network continues to think of its future plans which includes new content and adding approximately 180 hours of original content by year’s end.
WWE stock has increased 59% since the start of 2015. It closed up $2.88, 17%, to $19.36 on Thursday.
Notable earnings highlights and announcements:
- Live Event revenues decreased 34% to $26.4 million from $40.3 million in the prior year quarter primarily due to the timing of WrestleMania.
- The WWE video game, WWE2K15, has done well. It has assisted in boosting the Consumer Products Division revenues up 36% from $16.0 million to $21.8 million this quarter. Licensing revenues increased 105% from $5.5 million to $11.3 million on the strength of the game based on higher unit sales and effective royalty rates.
- WWE Studios increased slightly from $1.7 million (Q2 in 2014) to $2.1 million this year.
- In enticing fans to subscribe to the WWE, it plans to introduce a 3 month subscription card at retail which would give a “no credit card required” payment option.
- Despite the Network, PPV buys are still solid with an average of approximately 56,000 for the 3 events of the second quarter. Although not considered a PPV, a July 4th live event from Japan, Beast in the East become the most watched program of all-time on the network excluding PPVs.
- Television revenues increased 19% from $43.8 million (Q2 in 2014) to $52.1 million. The revenues do not include the timing of Total Divas which began airing in July.
The one take in comparing the WWE Network from this quarter last year was that the network was only available in the U.S. in July 2014. Now, the WWE has expanded internationally. Still, a bulk of the over 1 million subscribers are in the U.S. The earnings report is a win for the WWE as it appears that its most recent big gamble, the network, is doing well. The big challenge is maintaining and retaining subscribers. There is still a deficit in the amount of investment in the infrastructure of the network lost PPV revenue and TV licensing fees. Yet, the network appears to have caught on.
July 2, 2015
WWE has filed a lawsuit against several former WWE stars seeking a declaratory judgment against them. The complaint, filed in federal court in Connecticut is a result of a pre-litigation letter concerning potential concussion lawsuits against the company.
Robert Windham (aka Blackjack Mulligan), Thomas Billington (aka Dynamite Kid), James Ware (aka Koko B. Ware) and Oreal Perras (aka Ivan Koloff) are the named defendants. The WWE is seeking a court order stating that any potential lawsuit alleging traumatic brain injuries “and/or tort claims Defendants have threatened against WWE are time-barred by the applicable statutes of limitations/statues of repose under Connecticut law.”
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.
One can see the strategy for the WWE here as it recognizes the growing litigation on the horizon. It need only look at the NFL and NHL lawsuits to know that it needs to block the potential floodgates of litigation. The estate of Matt Osborne was the latest to file a lawsuit against the WWE. Recently, a court in Oregon where the Haynes lawsuit was filed transferred the case to Connecticut upon WWE motion. The WWE is seeking to do the same in other lawsuits filed across the country. Based on the WWE’s filing here, it would seem that once it brings the case under Connecticut jurisdiction, it will file a motion to dismiss based on the applicable statute of limitations under Connecticut law.
We will keep you posted.
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.