Full disclosure, I’m a WWE shareholder and have been telling you guys to buy WWE stock for several years now. Hopefully you guys listened because today WWE stock hit an all time high. Why is the stock surging? Because in an era when maintaining television audiences is becoming increasingly difficult WWE has something incredibly rare — a loyal and dedicated audience that continues to tune in every Monday and Tuesday on USA Network and watch WWE Raw and WWE Smackdown. Not to mention the WWE also has a network costing $9.99 a month with over two million current subscribers.
Now we can get into a debate about whether or not the WWE should count as a sport or not, but that’s a debate most sports networks seem to be over — I’ve been told Fox, NBC/Comcast, Turner and Disney/ESPN, are all involved, to some degree or another, in bidding for WWE television rights as the WWE’s television deal comes up for renewal this year.
That renewal is happening at the perfect time too because the WWE’s product is surging. Get this, WWE Raw so far in 2018 has averaged 3.3 million viewers a night. That might not sound impressive to you, but guess what the first round of the NBA playoffs averaged on TNT and ESPN? 3.15 million viewers!
So WWE Raw beat the first round of the NBA playoffs.
And, get this, the NBA’s television contract costs $2.5 billion a a year, the WWE’s television contract, at least right now, costs less than $200 million a year. Putting that cost into context, look at this graphic from a Guggenheim Partners WWE stock report that was passed along to me recently.
Look what each league costs on a per viewer basis.
— Clay Travis (@ClayTravis) May 3, 2018
Right now the average WWE viewer is worth 1/17th of the average NBA viewer. Now even if you think, as I do, that ESPN and TNT wildly overpaid for the NBA’s television rights — how does it cost 50% more per viewer for the NBA than it does for the NFL?! — isn’t the WWE insanely undervalued right now given that it produces similar audiences to the first round of the NBA playoffs? (Raw and Smackdown both handily beat regular season NBA playoff games.)
In fact, if you gave me a choice between the UFC or the WWE on TV right now, I’d take the WWE in a heartbeat. Why? Because the UFC can’t control whether its stars win or lose, the WWE can. Plus, for all the people out there who scream, “Wrestling is fake,” so what, you know what isn’t fake? The millions of people who watch every week. Furthermore, let’s be honest, most of TV is scripted. It’s not like “Game of Thrones” or “The Walking Dead,” are real either.
If WWE got just half of the money the UFC gets right now, it would still triple its existing rights deal.
Which, honestly, I think is probably likely.
And if the numbers get up to that level then many of these companies are going to start to ask an interesting question, why don’t we just buy the WWE outright? If you’re going to pay $500 or 600 million a year for WWE rights, wouldn’t it make more sense to buy the entire company for $4 or $5 billion and bring the WWE, and its fabulous network, in house to your company to use as a model for a potential over the top digital sports future? Hell, and I’ve written this before, if I were Netflix or Amazon I’d buy the WWE right now and bring all their programming in as part of my streaming service.
It’s a no brainer.
That’s especially the case when you consider that Vince McMahon is going to be focusing on launching a new football league soon and that Linda McMahon is now serving in the Trump administration. It would seem like the perfect time for both of them to cash out on the company they’ve built.
Regardless of whether you care about wrestling at all — I do because my boys love watching and I watch with them — I’d encourage you to pay attention to this WWE story, it’s a fascinating window into the present day sports rights TV market and an incredible preview into the future as well.
The WWE is about to get paid in a big way.