NEW YORK — World Wrestling Federation stock headed higher Friday as investors cheered the end of the money-losing XFL after one season.
Partners WWF and NBC announced Thursday they were shuttering the league after UPN declined to carry games for a second year. The partners had racked up losses of about $70 million. That won’t be repeated, prompting the market to bid WWF shares up nearly 8% to $14.19.
The stock had spiked to over $20 in late January, just before the XFL launched. When ratings tanked, the stock fell to about $14 and has been sitting there ever since. Now, Wall Streeters see it moving to the $16-$18 range.
They said that they’d anticipated at least two years of heavy losses for the league, with profitability possible in year three if the ratings were strong — a prospect that seemed highly unlikely.
Aside from the poor quality of play, critics said the XFL failed to create a necessary buzz over individual players a la professional wrestling.
“They didn’t have enough time for that. They made a conscious decision to promote the cheerleaders, because they knew what they had there, and the cities. They figured fans would watch their local football team even if they didn’t know who the players were,” said Dennis McAlpine, an analyst with Auerbach Pollak & Richardson in New York. Wrong.
McAlpine initiated coverage of the WWF Friday with a buy rating. Separately, investment firm Legg Mason upgraded the stock to buy from market perform.
Analysts are clearly elated the WWF avoided another $30 million-$40 million financial hit. The trouble now, McAlpine said, is the company still has $200 million of cash on its hands and nowhere to spend it. “Now it’s a question of what they do next,” he said, predicting more programming ventures.
“One thing Vince knows how to do is market. Even though he had a dreadful product, he got a 10 rating opening weekend,” another Wall Streeter said.