In case you missed it, MAJOR news dropped last week pertaining to WWE‘s relationship with FOX and this could have significant ramifications for the WWE trying to negotiate deals for the RAW television show. A few weeks ago, WWE announced a new TV deal for WWE Smackdown to begin during the Fall of 2024 with USA Networks now hosting the show. Well, where does that leave FOX, who is currently hosting WWE Smackdown? Many wondered if FOX was somehow negotiating for the RAW rights instead?
Well, they aren’t… According to FOX’s CEO on the decision not to renew their relationship with the WWE, “From an advertising point of view, we were not hitting the advertising numbers due to the audience of WWE to make the return for our return on investment to be above the levels that we would accept. But also, we didn’t attribute enough significant retransmission revenue to the WWE either. So it made sense for us to move on from them. They’ve been a great partner for many years. But just quite simply, we’re very disciplined and the Return on Investment (ROI) didn’t meet our disciplined parameters so, we wish them luck and we’ve moved on from them.”
Ouch, that’s gotta hurt!
And as Khan (not Tony or Nick) from Star Trek 2 once said, “revenge is a dish best served cold”. Well, the WWE opted to announce the new WWE Smackdown deal with USA Networks a YEAR before the existing deal was set to expire during the Fall of 2024. If you’ll recall, as the TKO corporation was terminating WWE employees and wrestlers, and Endeavor/TKO decided to announce the new Smackdown TV deal to offset job cuts in the news cycle. They announced it as a $1.4 billion NBC/Universal deal for the next 5 years with several network specials per year.
Well, how do you think FOX felt when they heard that announcement so far in advance? Thus, the FOX CEO Lachlan Murdoch said that he had two words for you… SUCK IT!
This hurts WWE badly, SPECIFICALLY the point about not hitting Advertising number to make the “return on investment” acceptable. Ouch…
Yes, WWE’s viewership has been surging during 2023… But that’s not the point. WWE’s viewership was surging during 1998, 1999, and 2000, but they received low ad rates back then too. Then, when Viacom signed them to a deal during mid 2000 to place RAW on TNN/Spike TV and extended WWE Smackdown on UPN, Viacom soon realized that WWE’s higher viewership meant SQUAT in light of higher viewership. Keep in mind that WWE could easily pull in 5 million or more viewers back then compared to 2 million today.
During the early 2000s, following wrestling hitting its peak of recent popularity, there was a study that came out regarding the demographics of WWE’s viewers. Now, what I’m about to tell you is just the results of study and is NOT insulting to you, a wrestling fan. I’m one of you, too, so thus don’t take this personally… Also, there are exceptions to every rule. What the study found is that WWE viewers tend to have low income, on average, compared to viewership of other shows or other sports.
Now, KEEP IN MIND that one reason why the Meltzers of the world and other analysts look closely at the 18-49 demographic is not because that is the most lucrative demo financially, but because that is the audience that Pro Wrestling attracts, particularly the younger half of it. That younger half, say 18 to 35 year-olds, hold a lower amount of WEALTH compared to those above them. Baby Boomers and Generation X, most of which are above 35 years of age, hold around 81% of the wealth in the United States. Thus, 35 and younger only holds 19% of the wealth. So yeah, when a large portion of the audience is much younger, thus cheaper ad rates can be charged because they have LESS disposable income.
However, NBA and UFC attract younger audiences, too, but can still command higher ad rates. It was reported that UFC on cable can attracted up to 7 times more on advertising dollars compared to the WWE, yet often has lower viewership on Cable. Something is up with the wrestling fanbase, as advertisers don’t feel the “bang for its buck” as they see with other shows or television. Personally, I believe that wrestling’s fanbase is more urban and living in densely populated cities, they have lesser disposable income to spend than compared to the apparent demographics of other sports or shows.
Hence why Pro Wrestling is typically sponsored by Fast Food, Video Games, and other cheaper consumer goods because that’s what younger folks can afford. If you look at NHL, NBA, and MLB who have lower audiences BUT have an older demographic with more wealth to spend, that’s why you see higher end commercials, such as for Cars and Trucks, sponsoring those games. While wrestling has a thick % of an older audience, too, it appears that they aren’t polling as much in the wealth categories as other sports or shows.
Plus… WWE has a history of bad stories hitting the fan, such as steroid trials of the early 1990s, content censorship via the Parents Television Council, Chris Benoit murders, wrestlers dying early, and many controversies of Vince McMahon. That scares away sponsors, too, so hence why Vince kisses the arses of companies like Mattel and lets them bend him over the table when they don’t particularly like Mandy Rose’s lifestyle outside of the ring. Many of the bad changes to WWE’s creative has been bending their will to the sponsors or to a company like Comcast.
However, we haven’t heard any stories about ad rates since the early 2000s… For all we knew, Comcast was always happy with their NBC/Universal deals and FOX was willing to pay $1 billion over 5 years. However, FOX just reiterated Pro Wrestling’s sponsorship problem and this will affect how WWE potentially obtains a deal for RAW and NXT.
Disney is already bleeding money… Do you think they are willing to pay over $1 billion for a company that has low ad rates just to place it on one of their ESPN channels or FX? TBS and TNT probably know all about low ad rates with AEW and FOX’s story confirms that the WWE has low ad rate issues, too. Do you think they are willing to shell out more than $1 billion for RAW? Comcast just paid WWE for content, so they will NOT double-dip since it’s likely that WWE asked for a high price of RAW.
Don’t be surprised if WWE gets lowballed on their RAW deal, thanks to FOX’s CEO just destroying WWE’s business model on television.
And don’t be surprised if Endeavor is already having 2nd thoughts on their WWE investment…
Also “in case you missed it”, Endeavor, the parent company who acquired WWE and formed the TKO Corporation that features WWE and UFC (with Endeavor as its majority shareholder), are reportedly in talks to be acquired itself. Abu Dhabi wealth fund is in talks for a takeover bid of Endeavor… Wow. As discussed before, Endeavor does carry over $4 billion in debt that must be paid in 2 years (or at least refinanced) and if their WWE ATM machine isn’t expected to pump out funds as expected, Endeavor could have liquidity problems. If Vince McMahon opts to cash-in his TKO shares, that’s more than $2 billion owed to him.
While it once appeared that the WWE made a major financial deal for its future, things may quickly change if Endeavor is acquired. Suddenly, you have foreign interests wanting their say in WWE’s creative direction. If you don’t believe me, look at how WWE has to present itself for Crown Jewel events and their complete denial of the airplane international incident that happened a few years ago. The new owners of Endeavor could flip the TKO board and both Vince McMahon and Nick Khan could suddenly be off of it. In addition, the new owners of Endeavor could change any lines of WWE management.
Things are cooking in the corporate world for the WWE, and we’ll see through 2024 if it’s actually for the better. FOX delivered a massive blow to their negotiating power for RAW and NXT, though, and the sale of Endeavor could shake things up further for WWE.
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