NEW YORK — Taking advantage of professional wrestling’s increasingly prominent position in showbiz, World Wrestling Federation owner Vince McMahon is planning to take the company public in a deal expected to put a value on WWF of at least $750 million.
WWF is understood to have hired Bear Stearns as lead underwriter on the stock offering. The promoter is expected to sell a minority stake in the company in the offering, raising about $150 million, Wall Streeters estimate. WWF did not return calls seeking comment.
McMahon’s timing could not be better. Not only have USA Network’s broadcasts of WWF been hitting ratings records lately, but the UPN weblet is expected to announce today that it plans to air a two-hour block of WWF matches every week beginning in the fall.
But McMahon has extended WWF’s franchise into syndication and pay-per-view, as well as merchandising, homevideo, magazine publishing, the Internet and live events. In total, WWF generated $230 million in revenue in the year to April 30, and $50 million in cash flow (earnings before interest, taxes, depreciation and amortization), sources said.
Wall Streeters say WWF will be marketed to investors as a “branded content” company, similar to Playboy Enterprises, which sells its content across a similar range of markets. But WWF’s popularity is growing, whereas Playboy’s growth has been stagnant in recent years.
WWF’s Monday night two-hour show on USA Networks is the highest-rated program on cable, drawing an average of 5 million households, which puts it on a par with some of the lower-rated broadcast network shows, according to Nielsen Media Research.
Including TNT’s World Championship Wrestling, wrestling accounts for six out of the top 10-rated shows on cable most weeks. WCW badly lags WWF in the ratings most weeks, however.
What is particularly appealing about WWF for advertisers is that it reaches the young-male demographic, Nielsen figures show. Monday night’s USA broadcast has even drawn viewers away from Monday Night Football, WWF claimed in a recent “Slam Gram” newsletter.
Ad sales bundled
And WWF benefits from the strength in ad dollars more than many program suppliers to cable networks because it sells its own ad time, splitting the revenue with USA. It bundles the ad sales together with those of its syndicated product and is expected to do the same with the UPN program block.
People close to the WWF said the company is making more money from its merchandising and licensing business than TV, however.
Even its Internet site is popular. WWF claims its Web site draws more than 1 million visits each month, making it “the sixth most popular sports Web site,” according to “Slam Gram.”Wall Street analysts estimate WWF would be valued in a stock offering at 15-18 times cash flow, which puts a minimum of $750 million on its overall value. But the size of the offering will be likely pitched on WWF’s fiscal 2000 cash flow, which is likely to be higher than the $50 million earned in fiscal 1999, Wall Streeters said.