The clock is ticking towards the February 14 deadline for NBCUniversal, a company owned by Comcast (CMCSA) , and World Wrestling Entertainment (WWE) to strike a deal that will keep the wildly popular wresting shows on NBC stations.
An exclusive negotiating period ended a little more than a week ago and WWE has given NBCUniversal until Valentine’s Day to produce a contract that it likes or it can start negotiations with other networks. WWE succinctly planned the television deals for all its shows, WWE Smackdown, WWE Monday Night Raw and WWE Main Event, to expire concurrently, giving them full leverage to shop all the programs as a package deal.
No one really seems to know exactly how much WWE wants for a contract, but it surely expected to be well above the expiring contract, which is valued at $140 million. WWE chairman Vince McMahon has made no bones about saying for years that the company has been undervalued.
Some reports suggest that WWE wants a deal in line or above the $200 million per year, 10-year contract extension that NBC Sports paid in 2011 for rights to the National Hockey League games. In November, Forbes reported that a new deal couple be up to $420 million. If that’s the case, investors need to keep an eye on the stock making a nice move.
According to Nielsen, WWE’s Monday Night Raw, which is broadcast on USA Network, held three of the top 10 spots for the week of January 27, with viewers of 4.85 million for its number 2 slot. With this sort of stellar ratings – and the fact that it runs for 52 weeks every year – it’s totally plausible that WWE could command a premium price tag.
NBCUniversal has apparently been kicking around the idea of sweetening the pot by offering to build a physical WWE Hall of Fame. WWE ceremonially inducts wrestling greats and others that have been part of the industry into a Hall of Fame, but it doesn’t have a brick-and-mortar location, such as that of the NBA, NFL, NHL or Major League Baseball. While appetizing, that is only a teaser compared to the overall value of a fat contract.
WWE said in January that it is launching its own over-the-top WWE Network, which is scheduled to go live via the Internet on February 24 at a cost of $9.99 per month. Members will not only get access to new shows and the library of media WWE owns, but also be able to view 12 WWE pay-per-view events that are produced each year. Regulatory filings show that the company spent more than $40 million developing the concept. This move could be a game-changer for WWE, but it also could sour some relationships with traditional providers, like NBCUniversal.
That story will be told in the coming weeks as WWE tries to finalize a contract with NBCU, or someone else. If the two parties can’t spend Valentine’s Day together, there are plenty of other potential suitors to deliver the programming to the millions of rabid WWE fans. Of course, if another company doesn’t come calling with a bigger and better package, WWE will have lost all of its leverage and could find itself pinned against the ropes. At this moment, though, WWE still is holding the belt and odds seem good that it is going to retain its title when a contract is finally announced.
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer