NEW YORK — Sumner Redstone has body-slammed Barry Diller. A Delaware Chancery Court ruled Tuesday night that the World Wrestling Federation could indeed walk away from a renewal with the USA Network and sign a five-year deal with Viacom.
“This is a fantastic victory for Viacom,” said Redstone in a phone interview. “TNN will now become one of the most important networks in all of cable.” Beginning in September 2000, the hugely popular WWF “Raw Is War” two-hour primetime cablecast, now seen on USA every Monday, will shift over to Viacom-owned TNN, thanks to a clause in the new contract.
As one gauge of “Raw Is War’s ” audience pull in the second quarter of 2000, 26 of the 27 highest-rated programs on basic cable were editions of the weekly two-hour spectacle.
The average “Raw Is War” Nielsen rating for the most recent quarter was a 6.3 in cable homes — 7% higher than during the same period last year, according to WWF researchers.
USA cuts costs
USA put its best possible face on the court’s decision. In a statement, Stephen Chao, president of USA Cable, said the loss of five hours of WWF programming per week “will have a negligible effect on our ratings and a positive effect on our cash flow.” Chao’s comment about cash flow refers to the fact that Vince McMahon, chairman of the WWF, takes charge of selling advertising on the wrestling show. But USA will be hard pressed to come up with replacement programming on Mondays and Sundays from 7-8 p.m. (the “Sunday Night Heat” series) to equal the household ratings of the WWF. And young males who are wrestling devotees will prove a sorely missed demographic.
The deal between Viacom and the WWF includes not only the shifting of four of the five weekly WWF hours from USA to TNN in September but the move of “Sunday Night Heat” to the MTV Network. Other clauses include at least $8 million to promote the shift, to be spent across all of Viacom’s media platforms, including TV, cable, radio and billboards; a $3.5-million outlay by Viacom for seven annual WWF TV specials; a one-hour drama series, probably for UPN; and various pay-per-view events at Viacom’s Famous Players theaters in Canada, plus events and attractions at Viacom’s Paramount Parks.
Even before Chancellor William Chandler of the Delaware Court handed down his decision, the WWF said in its fourth-quarter report on Tuesday morning that it is racking up such glossy revenues that it forecasts a 15% increase in revenues for fiscal 2001. At least that’s the word from Linda McMahon, CEO of the WWF.
For the fourth quarter ended April 30, the WWF harvested net revenues of $116.4 million, a 24% gain over the $93.8 million for the same period last year. The WWF was off in revenues and per-share earnings during the same period this year because of a $1.1 million investment in startup costs for the XFL, a new pro football league, and $4 million in legal and accounting costs associated with the WWF’s dealings with NBC — half owner of the XFL — and with Viacom/CBS. But a spokesman for the WWF emphasized that the 19¢ earnings per share reported by the company for this quarter is above the 16¢ predicted by Wall Street.
A good, healthy ‘Smack’
In two other signs of robust health for the company, “WWF Smackdown,” the highest-rated weekly primetime series on UPN, continues to shoot up in the ratings, reaching a 5.0 rating during the most recent quarter. And the pay-per-view specials produced by the WWF have ramped up their buy-rates in the last year by 39%, from an average of 1.8 million to 2.5 million.
For the new football league, the WWF is aggressively optimistic, predicting that the XFL will rake in $80 million to $85 million in revenues during 2001, its first season, and spend only $35 million to $38 million. And NBC will shoulder half of that expenditure.