WWE’s Vince McMahon: ‘We Were a Little Disappointed’ With NBCU Deal

WWE chairman Vince McMahon

Wall Street wasn’t impressed last week with WWE’s new multiyear licensing deal with NBCUniversal to keep its popular shows “Raw” and “SmackDown” on USA Network and Syfy. Neither was WWE chairman Vince McMahon.

“We were a little disappointed with our NBCU deal,” McMahon said during his first conference call with analysts to discuss the deal on Monday. “Whether we failed or not, I’m not certain.”

The call took place several days after investors punished WWE’s stock, lowering it 43% on Friday — dropping it $8.66 to $11.27 — after the NBCU deal was announced Thursday. McMahon is estimated to have lost $357 million himself on the single-day stock sell-off.

Specific financial terms of the NBCU deal have not yet been revealed, but analysts had expected WWE to at least double its licensing fees as live event programming is commanding not only strong ratings but interest from advertisers. WWE earned around $106 million of revenue from domestic broadcast rights in 2013 and $55 million from its deals overseas.

Deciding to shop all of its TV shows at once, starting in January, was new territory for WWE — and a way to determine the value of its programming after raising the profile of the brand over the past five years by making it more family friendly and attractive to advertisers.

SEE ALSO: WWE Aims to Pin Down Rich New TV Rights Deals (EXCLUSIVE)

While WWE didn’t comment on the talks during the negotiating process, it also didn’t dissuade analysts from speculating that WWE would land a significantly richer deal.

Still, the final pact “is still a good deal but not what we wanted,” McMahon said. “Internationally, we did better than we did domestically,” citing the company’s new deals in the U.K. and Thailand. A new deal in India is forthcoming.

While WWE has been able to renegotiate its other TV deals in international territories and nearly double revenue to $200 million, the new NBCU pact will not come close to what professional sports orgs like Nascar and soccer are recently commanding from their new TV deals.

“The company estimates that it will increase the average annual value of these key television agreements to approximately $200 million, representing an increase of more than $90 million, that is nearly three times the increase achieved in the previous round of negotiations,” WWE said in a statement.

SEE ALSO: WWE Closes Deal to Keep ‘Raw,’ ‘SmackDown’ on USA Network, Syfy

The time frame of the new NBCU deal was not disclosed but is said to be less than five years, WWE said.

“Maybe we gave you too much information or not enough,” referring to the strong reaction on the deal last week from investors, McMahon said from London, where he is producing tonight’s episode of “Raw.”

To clear up “any degree of misunderstanding of what we’re trying to do,” McMahon stressed that WWE’s core business of live events and TV shows is “rock solid,” and that moving forward is looking to grow its all-digital streaming service, the WWE Network, to reach a global subscriber base of at least 1.3 million to 1.4 million to make up for any canniblization of its pay-per-view business, whose events are now streamed on the digital platform as part of a $10 a month package. WWE generated $40 million from PPV buys in 2012, it said.

Overall, WWE’s TV revenue will increase $65 million to around $120 million in 2015, it said.

McMahon added that the launch of the WWE Network in February “definitely had a negative impact” on its negotiations with NBCU and other potential TV partners on its programming. He wasn’t sure just how much, however. “That was part of a lighter number in terms of television rights. That’s a fair thing to say.”

Had WWE not launched the service when it did, though, “it would have taken us another year,” given that it wanted to have it ready before “WrestleMania,” its biggest PPV of the year, McMahon said.

On the network, WWE cautioned that “we’re still getting our sea legs,” especially when it comes to the costs it takes to run and grow the network’s offerings, according to George Barrios, WWE’s chief strategy and financial officer.

WWE has been one of the first entertainment players to make the leap into the OTT space and commit to go around traditional cable and satellite providers and launch an all-streaming network. The NFL will launch its own service, NFL Now, in July.

Companies are clearly looking to launch new businesses around the 42 million U.S. homes that are now connected to the Internet through TVs or other content devices — and take more control in how their entertainment is distributed and monetized.

As a result, Barrios stressed that there’s little to compare it to when it comes to success.

“There isn’t a model to gauge success; there are not a lot of benchmarks to compare to,” said Barrios, who added it might take two years to fully comprehend what it takes to launch a successful OTT service. “You need to see it and live it to get perspective. We’re at the beginning of the beginning.”

To grow subscribers, WWE said it will focus on creating compelling new content, launch the network in new international territories, expand its availability on other digital platforms, introduce new features and launch a marketing campaign.

“At the company’s core, we’re promoters and marketers,” Barrios said.

WWE said it doesn’t expect to reach a stable rate of subscribers — of around 2.5 million to 3.8 million worldwide — until two to three years from now. A regular update on subscriber counts will be provided during WWE’s quarterly earnings reports, it said. It announced more than 660,000 WWE Network subscribers the day after “WrestleMania” in April.

When asked about AT&T’s interest in investing in similar OTT services, now that it’s buying DirecTV, and whether there were talks with WWE, McMahon said, “Everyone’s going to recognize OTT is the future and you will see a lot more of this. We’re wide open to listening to and (potentially dealing) with everyone else. It’s not our way or the highway.”

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  1. The WWE network bites the big one. It is routed to an Asian Indian country for tech support. They barely know computer 101. After calling 6 times I was told that Chromebooks are not supported. So I told them I want to cancel my subscription. I was told, “What do you think, we have a cancel button” “There is no cancel button”. So I called my credit card company and cancelled through them. Even though they don’t support Chromebooks they still want me to pay because eventually they will support them. Bad move WWE. I have bought Wrestlemania since 1997. Bought my nephew tons of your products. I even have a bunch of your products around my house. I will not be spending anymore money with you.

  2. lakawak says:

    And people wonder why cable TV costs so much. When investors slap a company for ONLY getting 50% more for rights to their programming, it becomes obvious. In the end, we pay for that increase. NBC Universal passes the added cost on to the cable/satellite operators, who pass it along to us.

    • ez1 says:

      Whoever sold their stock is not worthy of it. Vince is a pioneer of a new media world and has always been ahead of his time. You don’t need to be a wrestling fan to see that. He has been connecting directly to his market since 1982, traveling the world with his storytellers and players in toll. He is a master of his market, an innovator in live entertainment and a genius in the art of multiplying by dividing. Whoever sold their stock had already made money and simply cashed out.

  3. Darla says:

    You can’t keep a Good business family down.

  4. Woody says:

    WHO GIVES A CRAP???? WRESTLING IS FAKE PEOPLE!!! INVEST YOUR MIND ON EDUCATIONAL TELEVISION NOT FAKE A$$ CRAP!!!

  5. Oh no, Vince McMahon lost money. How tragic, in the absolute least sense of the word.

  6. Robert says:

    no not have anything do with the them

  7. Shayde says:

    I’m sure the stock drop was all scripted by the writers.

  8. FSN Global 's Rick Fox says:

    Reblogged this on Global News Now.

    • Vince kennedy Machamn is a complete FOOL in Keep hes Billiondaliare in 1 place NYS exchancge he lost it all. now he no longer a Billionaire but a simple millionaie. he has to refous he goals on re-inesting hes money hes making other areas in inesting. I use to watch the sport for 29 yrs, but its lost its luster until Hulk Hogan came on back. Vince has alot of damage Conrol on hes Part too do to reach high UP were he was to have all that Money. all the best too you Vince and God Bless you- Canadian reader, Bruce Herrmann from Edmonton, alberta, Canada.

  9. Anyone doing any business with NBCU invariably winds up being disappointed. NBC and all of its machinations and versions has been uninspired since the days of the departures of “Friends,” “Cheers,” “Frasier” and “Seinfeld.” Any of the gold of that second “Golden Age” of television has long since lost its luster and become tarnished through succeeding decades. NBCU is now nothing but a lot of puffery riding high on the false hopes of a contract with the corrupt Olympics Committee and the association with the criminality of the National Football League with its Sunday Night Football Franchise. Vince would have done better to send the entire WWE cast to NBCU headquarters to shake the place up and down!

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