Week in Wrestling #14
Wrestling News From the week of
October 24 - October 30, 2015
October 24 - October 30, 2015
Double Juice in a Cell
The biggest story coming out of Hell in a Cell was the double juice in the Brock Lesnar vs. Undertaker main event. Lesnar beat Undertaker clean after a third F-5 to end their program to headline the 10/25 show at the Staples Center in Los Angeles. Lesnar bled early, in an identical fashion as at WrestleMania. He went headfirst into the ring post. Lesnar put his gloved hand in front of the post, but his head actually went under the glove and hit the post. He then rubbed the back of his glove on his forehead. He was bleeding like crazy, and needed nine staples to close the cut.
Undertaker was outside the ring. Lesnar took the glove off his right hand, punched Undertaker in the forehead. Undertaker also rubbed the back of his gloved hand on his forehead and came up bleeding.
With Lesnar bleeding badly, there was a commotion at the Gorilla position with Vince McMahon. Whether he was upset or putting on a show and acting upset to everyone else there is a matter of conjecture. He sent a doctor to the ring. The doctor was in there and tried to clean the blood off. But at one point, Lesnar shoved the doctor.
Neither Lesnar nor Undertaker were reprimanded or talked to by Vince McMahon or anyone about these incidents after the show. Lesnar had his cut taken care of and flew back home. Undertaker also went home the next day.
WWE sent out a statement after the show basically saying that the practice of blading is banned, but sometimes there are accidental cuts.
What I can say with 100 percent certainty, is that the blood was not an accident. The coincidence of Lesnar doing the exact same spot and coming up bloody in the exact same way as in WrestleMania was not coincidental. Whether he hit the post and opened his head up, or cut himself, it was his intent to get blood. The idea that he took his right glove off and drilled Undertaker, meant the same thing. The question there is that typically when someone is looking to get hard way juice, a practice that went out of vogue in wrestling decades ago, the idea was short punches to the eye brow, where the skin and bone makes it the easiest to open up. Undertaker bled from the forehead, the same spot where wrestlers would normally cut themselves.
Blading is banned in WWE. The last time someone bladed, which was Dave Bautista in 2008, something he decided to do on his own in a match with Chris Jericho, he was fined $100,000, which ended up being quite the deterrent for guys going into business for themselves and safely–safely being in comparison to ramming your own head into a steel post or punching someone in the head hard enough to open them up--cutting themselves.
If the story going around is accurate, and it was hard way blood, and was clearly intentional, that’s a lot less safe than blading. But it’s also less gross to sponsors, because accidental blood happens in combat sports all the time. Slicing ones forehead, while safer and practiced for decades in wrestling, comes across barbaric to the outside world. If the doctor wasn’t in on being shoved, and the word we were given that he wasn’t, it’s hard to make sense that Lesnar wasn’t reprimanded seriously.
The biggest story coming out of Hell in a Cell was the double juice in the Brock Lesnar vs. Undertaker main event. Lesnar beat Undertaker clean after a third F-5 to end their program to headline the 10/25 show at the Staples Center in Los Angeles. Lesnar bled early, in an identical fashion as at WrestleMania. He went headfirst into the ring post. Lesnar put his gloved hand in front of the post, but his head actually went under the glove and hit the post. He then rubbed the back of his glove on his forehead. He was bleeding like crazy, and needed nine staples to close the cut.
Undertaker was outside the ring. Lesnar took the glove off his right hand, punched Undertaker in the forehead. Undertaker also rubbed the back of his gloved hand on his forehead and came up bleeding.
With Lesnar bleeding badly, there was a commotion at the Gorilla position with Vince McMahon. Whether he was upset or putting on a show and acting upset to everyone else there is a matter of conjecture. He sent a doctor to the ring. The doctor was in there and tried to clean the blood off. But at one point, Lesnar shoved the doctor.
Neither Lesnar nor Undertaker were reprimanded or talked to by Vince McMahon or anyone about these incidents after the show. Lesnar had his cut taken care of and flew back home. Undertaker also went home the next day.
WWE sent out a statement after the show basically saying that the practice of blading is banned, but sometimes there are accidental cuts.
What I can say with 100 percent certainty, is that the blood was not an accident. The coincidence of Lesnar doing the exact same spot and coming up bloody in the exact same way as in WrestleMania was not coincidental. Whether he hit the post and opened his head up, or cut himself, it was his intent to get blood. The idea that he took his right glove off and drilled Undertaker, meant the same thing. The question there is that typically when someone is looking to get hard way juice, a practice that went out of vogue in wrestling decades ago, the idea was short punches to the eye brow, where the skin and bone makes it the easiest to open up. Undertaker bled from the forehead, the same spot where wrestlers would normally cut themselves.
Blading is banned in WWE. The last time someone bladed, which was Dave Bautista in 2008, something he decided to do on his own in a match with Chris Jericho, he was fined $100,000, which ended up being quite the deterrent for guys going into business for themselves and safely–safely being in comparison to ramming your own head into a steel post or punching someone in the head hard enough to open them up--cutting themselves.
If the story going around is accurate, and it was hard way blood, and was clearly intentional, that’s a lot less safe than blading. But it’s also less gross to sponsors, because accidental blood happens in combat sports all the time. Slicing ones forehead, while safer and practiced for decades in wrestling, comes across barbaric to the outside world. If the doctor wasn’t in on being shoved, and the word we were given that he wasn’t, it’s hard to make sense that Lesnar wasn’t reprimanded seriously.
Hell in a Cell Aftermath
The show drew a legitimate turn away crowd, announced at 17,505. The show sold out several days in advance, even to the point talent was told there were no comps to give out to friends last minute and there were people turned away.
It was a good card up and down. Most matches had clean endings and the winners were predictable, because they made sense. Two matches, John Cena vs. Del Rio and Kevin Owens vs. Ryback, were kept short, but they weren’t bad.
The show drew a legitimate turn away crowd, announced at 17,505. The show sold out several days in advance, even to the point talent was told there were no comps to give out to friends last minute and there were people turned away.
It was a good card up and down. Most matches had clean endings and the winners were predictable, because they made sense. Two matches, John Cena vs. Del Rio and Kevin Owens vs. Ryback, were kept short, but they weren’t bad.
Del Rio signs with WWE
Probably no WWE signing in recent memory has had more repercussions on multiple promotions as the signing of Alberto Del Rio, as he returned and won the U.S. title as the mystery opponent of John Cena.
It was a shocking ending in the sense they hadn’t built up much in the way of momentum and nobody was ready for a finish. Cena went for the Attitude Adjustment and Del Rio rolled behind him, hit a backstabber, used a superkick and got the pin. Nobody expected that was the finish given Cena kicking out of stuff that came across 100 times worse.
Alberto is still the AAA Mega heavyweight champion and was the biggest star last season with Lucha Underground. But that’s all off the table. He signed a deal that multiple sources have said was for a $1,450,000 per year downside (and others who wouldn’t give a figure indicated something in that ballpark) with a reduced schedule, which is largely because WWE felt they needed an Hispanic star.
Even though Del Rio got the super push on his last go-around, he had become flat and ended up as a mid-carder, partially due to a botched babyface turn. That was given up on, particularly when heel Dolph Ziggler was cheered like crazy by the day-after-WrestleMania crowd in East Rutherford, NJ, when he cashed in his Money in the Bank briefcase to win the world heavyweight title on the day after Mania Raw in 2013. This led to a Ziggler vs. Del Rio double turn when Del Rio regained the title. Del Rio was kept strong for several months, but started getting phased down in 2014, being in the mid-card 50/50 club. After the incident where he slapped Cody Barbierri, a WWE social media employee, for making an ill-advised bad joke that he took as a racial remark, he was fired on August 7, 2014.
But even when not used on top, he was always front and center at company media events, along with John Cena, and ahead of guys like C.M. Punk or Daniel Bryan, even though they were far bigger stars at the time, because of the feeling that he looked and talked like a star and would represent the image of the company better to the media and non-wrestling fans. He was considered important in reaching the Hispanic media not just in the U.S., but around the world. In addition, even though WWE is still more popular with Hispanics than any other ethnic group, the company has taken a hit in those Demographics in recent years. But that coincides more with the loss of Rey Mysterio, as even before, the ups and downs in that demo were related to when Mysterio was and wasn’t working.
His first shows in Los Angeles and San Diego made sense, although it was weird in the sense he was coming in as a heel and put in markets where it was a lock he’d be cheered.
The surprise of him coming in with Zeb Colter as his manager on the surface doesn’t seem to make sense, nor does a long-term pairing. They don’t really look right together. Alberto was said to have greatly improved his promos, which were good to begin with, since leaving WWE. He did come across like more of a star in Lucha Underground, but that show is heavily edited. He came across like a superstar babyface in AAA in presence and promos, but that’s also Spanish language. Either way, he doesn’t need anyone talking for him.
Probably no WWE signing in recent memory has had more repercussions on multiple promotions as the signing of Alberto Del Rio, as he returned and won the U.S. title as the mystery opponent of John Cena.
It was a shocking ending in the sense they hadn’t built up much in the way of momentum and nobody was ready for a finish. Cena went for the Attitude Adjustment and Del Rio rolled behind him, hit a backstabber, used a superkick and got the pin. Nobody expected that was the finish given Cena kicking out of stuff that came across 100 times worse.
Alberto is still the AAA Mega heavyweight champion and was the biggest star last season with Lucha Underground. But that’s all off the table. He signed a deal that multiple sources have said was for a $1,450,000 per year downside (and others who wouldn’t give a figure indicated something in that ballpark) with a reduced schedule, which is largely because WWE felt they needed an Hispanic star.
Even though Del Rio got the super push on his last go-around, he had become flat and ended up as a mid-carder, partially due to a botched babyface turn. That was given up on, particularly when heel Dolph Ziggler was cheered like crazy by the day-after-WrestleMania crowd in East Rutherford, NJ, when he cashed in his Money in the Bank briefcase to win the world heavyweight title on the day after Mania Raw in 2013. This led to a Ziggler vs. Del Rio double turn when Del Rio regained the title. Del Rio was kept strong for several months, but started getting phased down in 2014, being in the mid-card 50/50 club. After the incident where he slapped Cody Barbierri, a WWE social media employee, for making an ill-advised bad joke that he took as a racial remark, he was fired on August 7, 2014.
But even when not used on top, he was always front and center at company media events, along with John Cena, and ahead of guys like C.M. Punk or Daniel Bryan, even though they were far bigger stars at the time, because of the feeling that he looked and talked like a star and would represent the image of the company better to the media and non-wrestling fans. He was considered important in reaching the Hispanic media not just in the U.S., but around the world. In addition, even though WWE is still more popular with Hispanics than any other ethnic group, the company has taken a hit in those Demographics in recent years. But that coincides more with the loss of Rey Mysterio, as even before, the ups and downs in that demo were related to when Mysterio was and wasn’t working.
His first shows in Los Angeles and San Diego made sense, although it was weird in the sense he was coming in as a heel and put in markets where it was a lock he’d be cheered.
The surprise of him coming in with Zeb Colter as his manager on the surface doesn’t seem to make sense, nor does a long-term pairing. They don’t really look right together. Alberto was said to have greatly improved his promos, which were good to begin with, since leaving WWE. He did come across like more of a star in Lucha Underground, but that show is heavily edited. He came across like a superstar babyface in AAA in presence and promos, but that’s also Spanish language. Either way, he doesn’t need anyone talking for him.
Impact on AAA and Lucha Underground
The WWE offer was out of the league of what AAA could afford. AAA had been really enthusiastic early this year. There was the combination of the Lucha Underground partnership, hoping the big money investors to get a foothold in the U.S. market to establish their stars, and acquiring the “Dream Team” of top babyfaces in Alberto, Mysterio and Myzteziz, to join top heel Perro Aguayo Jr.
Now, all are gone from the promotion except Mysterio. AAA was disappointed, but there seemed to be no hard feelings, as the nature of whose departure came across as professional. Still, those very close to the situation say the deal was put together roughly five weeks ago, after communication with WWE opened up six weeks ago, when things fell apart with Lucha Underground.
One person close to the situation said that everyone in WWE will tell you the deal was made three weeks ago, and AAA will tell you it was made at the last minute, but really it was done in mid-September. The plan of him coming in and beating John Cena in Los Angeles to win the U.S. title as a surprise as far as the creative dated back several weeks, and it was a plan that never wavered.
With Lucha Underground, which was really the catalyst of everything, both in him being so adamant about not going back at first, and his going back, it was described using Jim Ross vernacular, issues of “cash and creative.”
There was a financial issue, said to be money arriving late, which led to him being able to get out of his contract. Lucha Underground claimed it was a mutual decision. Privately some tried to claim an upgrade, citing that Mysterio, who will be the top star in season two, was a bigger star, which he clearly is from a name standpoint and even more when it comes to marketing and merchandising potential. But like with AAA, the value of having both was very strong. At the same time, with Lucha Underground cutting the budget and Alberto being the highest paid guy, it was downplaying what his loss would mean. Realistically, Alberto was not a make or break guy for the company, and not as big a loss as losing your top guy to WWE would normally be, or as big as it is for AAA.
Those close to the situation say he was promised the top spot and felt that when he wasn’t in the main event position at Ultima Lucha, that he wasn’t in the top spot. It was described as issues with he and John Fogelman, in the sense Fogelman treated him like an actor working on a television show. He had complained to others that he wasn’t positioned the right way.
The WWE offer was out of the league of what AAA could afford. AAA had been really enthusiastic early this year. There was the combination of the Lucha Underground partnership, hoping the big money investors to get a foothold in the U.S. market to establish their stars, and acquiring the “Dream Team” of top babyfaces in Alberto, Mysterio and Myzteziz, to join top heel Perro Aguayo Jr.
Now, all are gone from the promotion except Mysterio. AAA was disappointed, but there seemed to be no hard feelings, as the nature of whose departure came across as professional. Still, those very close to the situation say the deal was put together roughly five weeks ago, after communication with WWE opened up six weeks ago, when things fell apart with Lucha Underground.
One person close to the situation said that everyone in WWE will tell you the deal was made three weeks ago, and AAA will tell you it was made at the last minute, but really it was done in mid-September. The plan of him coming in and beating John Cena in Los Angeles to win the U.S. title as a surprise as far as the creative dated back several weeks, and it was a plan that never wavered.
With Lucha Underground, which was really the catalyst of everything, both in him being so adamant about not going back at first, and his going back, it was described using Jim Ross vernacular, issues of “cash and creative.”
There was a financial issue, said to be money arriving late, which led to him being able to get out of his contract. Lucha Underground claimed it was a mutual decision. Privately some tried to claim an upgrade, citing that Mysterio, who will be the top star in season two, was a bigger star, which he clearly is from a name standpoint and even more when it comes to marketing and merchandising potential. But like with AAA, the value of having both was very strong. At the same time, with Lucha Underground cutting the budget and Alberto being the highest paid guy, it was downplaying what his loss would mean. Realistically, Alberto was not a make or break guy for the company, and not as big a loss as losing your top guy to WWE would normally be, or as big as it is for AAA.
Those close to the situation say he was promised the top spot and felt that when he wasn’t in the main event position at Ultima Lucha, that he wasn’t in the top spot. It was described as issues with he and John Fogelman, in the sense Fogelman treated him like an actor working on a television show. He had complained to others that he wasn’t positioned the right way.
Survivor Series Plans
The next PPV is Survivor Series on 11/22 in Atlanta at the Phillips Arena. The main event is Seth Rollins defending the WWE title against Roman Reigns. It’s interesting they would take this direction now. They are clearly trying to make Reigns the new face of the company, and one would think they’d pull the trigger at WrestleMania, when interest and focus on the company is the highest by far. But Reigns isn’t popular with the WrestleMania crowd. This past year, nobody was booed even close to as much as him, even though pushed as the top babyface on the show.
With Survivor Series, you sacrifice the spotlight but won’t have as bad a reaction to kicking the reign off. Or he could be screwed and build the change up for later. As a heel champion, Rollins has gone through the entire top of the face side except for Undertaker and Reigns.
On the heel side for Reigns, there are a number of potential PPV headliners including Del Rio, Rollins, Kevin Owens, Bray Wyatt, Braun Strowman (he’s getting the monster push, but the match would be a risk). Even faces like Lesnar, Dean Ambrose and Cena could be mixed in, and Reigns against Cena or Lesnar could headline WrestleMania if Reigns is champion. The latter could explain Lesnar vs. Undertaker being moved up.
It seems like that there will be a traditional Survivor Series elimination match featuring Undertaker (in what is being billed as his 25th anniversary match since Undertaker debuted in WWF at the 1990 Survivor Series) & Kane and two others against The Wyatt Family. The only things that have been set up are that Charlotte would almost surely be defending the Divas title against Paige, or in a three-way that would involve Nikki Bella, and it’s possible they’ll go with New Day vs. Lucha Dragons for the tag title, since the Dragons won a four-way on Smackdown that may have been for a title shot here.
The Undertaker going against the Wyatts was set up by a well done segment after the main event. After Undertaker lost, he was looking to the crowd for support and sympathy, and got it. The crowd was feeling the legend who had passed the torch and it was the feel good moment, and with emotions strong, the Wyatts came out to ruin the moment and beat Undertaker down, and they eventually carried him out on their backs almost as if he was crucified.
With Cena and Lesnar off the show and Undertaker being willing to work more dates this year, he was booked onto the show. If it is an eight-man tag, that also wouldn’t require him to have that much wrestling time in the match.
The next PPV is Survivor Series on 11/22 in Atlanta at the Phillips Arena. The main event is Seth Rollins defending the WWE title against Roman Reigns. It’s interesting they would take this direction now. They are clearly trying to make Reigns the new face of the company, and one would think they’d pull the trigger at WrestleMania, when interest and focus on the company is the highest by far. But Reigns isn’t popular with the WrestleMania crowd. This past year, nobody was booed even close to as much as him, even though pushed as the top babyface on the show.
With Survivor Series, you sacrifice the spotlight but won’t have as bad a reaction to kicking the reign off. Or he could be screwed and build the change up for later. As a heel champion, Rollins has gone through the entire top of the face side except for Undertaker and Reigns.
On the heel side for Reigns, there are a number of potential PPV headliners including Del Rio, Rollins, Kevin Owens, Bray Wyatt, Braun Strowman (he’s getting the monster push, but the match would be a risk). Even faces like Lesnar, Dean Ambrose and Cena could be mixed in, and Reigns against Cena or Lesnar could headline WrestleMania if Reigns is champion. The latter could explain Lesnar vs. Undertaker being moved up.
It seems like that there will be a traditional Survivor Series elimination match featuring Undertaker (in what is being billed as his 25th anniversary match since Undertaker debuted in WWF at the 1990 Survivor Series) & Kane and two others against The Wyatt Family. The only things that have been set up are that Charlotte would almost surely be defending the Divas title against Paige, or in a three-way that would involve Nikki Bella, and it’s possible they’ll go with New Day vs. Lucha Dragons for the tag title, since the Dragons won a four-way on Smackdown that may have been for a title shot here.
The Undertaker going against the Wyatts was set up by a well done segment after the main event. After Undertaker lost, he was looking to the crowd for support and sympathy, and got it. The crowd was feeling the legend who had passed the torch and it was the feel good moment, and with emotions strong, the Wyatts came out to ruin the moment and beat Undertaker down, and they eventually carried him out on their backs almost as if he was crucified.
With Cena and Lesnar off the show and Undertaker being willing to work more dates this year, he was booked onto the show. If it is an eight-man tag, that also wouldn’t require him to have that much wrestling time in the match.
Raw Ratings
Raw on 10/26 remained at the same level it has been at throughout football season, doing a 2.45 rating and 3.34 million viewers (1.42 viewers per home), with the rating well up from usual but viewers at the same level as every week since football started.
Once again, they got no bump coming the day after a PPV show, and it was the weakest competition of late, with no baseball and an Arizona Cardinals vs. Baltimore Ravens game that did 12.20 million viewers, less than the season average.
The first hour did 3.64 million viewers, the best since football season started. Usually if there is curiosity off the PPV, hour one the next day will do well. But the 3.21 million viewers for the second hour was the lowest second hour since 1997. The third hour, maintaining the 3.21 million viewers, was the best of the past five weeks. The male drop from hour one to two wasn’t as significant as would be expected given those ratings. What happened and caused the big drop is that 24% of women who watched the first hour then turned it off and didn’t come back.
Raw on 10/26 remained at the same level it has been at throughout football season, doing a 2.45 rating and 3.34 million viewers (1.42 viewers per home), with the rating well up from usual but viewers at the same level as every week since football started.
Once again, they got no bump coming the day after a PPV show, and it was the weakest competition of late, with no baseball and an Arizona Cardinals vs. Baltimore Ravens game that did 12.20 million viewers, less than the season average.
The first hour did 3.64 million viewers, the best since football season started. Usually if there is curiosity off the PPV, hour one the next day will do well. But the 3.21 million viewers for the second hour was the lowest second hour since 1997. The third hour, maintaining the 3.21 million viewers, was the best of the past five weeks. The male drop from hour one to two wasn’t as significant as would be expected given those ratings. What happened and caused the big drop is that 24% of women who watched the first hour then turned it off and didn’t come back.
WWE 3rd Quarter Earnings Report
WWE announced their Q3 2015 earnings Thursday morning of $0.14 per share, beating Capital IQ Consensus of $0.08 per share. During the period of July 2015 to September 2015, WWE brought in $166.2 million in revenue while third quarter operating income was $17.9 million and adjusted OIBDA was $23.4 million.
Compared to the financial turbulence of 2014, this was a successful quarter with the highest adjusted OIBDA on record since Q2 of 2012. However, this good news wasn’t reflected in the WWE share price which dropped more than 10% since the market opened Thursday morning.
The key drivers for WWE growth have been the recognition of the escalating television rights which WWE negotiated in 2014 and the evolution of the WWE Network subscription model.
WWE has secured large growth from a bundle of key TV contracts (United States, United Kingdom, India, Thailand, Canada, Mexico and United Arab Emirates). Combined, these agreements were worth almost three-quarters of WWE’s total 2014 television rights revenue ($176M). In the latest earnings release, WWE finally provided an outline of the annual escalation expected for these contracts for 2015 & 2016.
Already, WWE has earned $175.5M year-to-date on television rights fees in 2015 compared to a nine-month number of $126.3M in 2014. While 39% annual growth is impressive, it’s worth noting that the plunge in WWE stock value last year was tied to WWE underdelivering against investor expectations for renegotiating their major US deal with NBC Universal. In fact, some investors felt so misled that lawsuits were filed.
Nevertheless, television rights remain the economic engine for WWE’s year-round growth. While some divisions have seasonal fluctuations (live events during the WrestleMania quarter, WWE Shop in December, licensing in Q1), WWE’s television rights contracts are structured so they continue to grow each quarter through the deal. Quarterly variations are largely driven by the scheduling of supplemental programming such as WWE’s reality shows Total Divas and Tough Enough, both which aired in Q3 of '15. While these additional programs bring in additional money and possible new audience/demographics, it was noted during today’s conference call that the cost of production for reality shows was much higher than the “in-ring” entertainment.
Recently, live WWE ratings have been their lowest levels since 1997.
Yet, WWE’s television rights agreements are not tied to weekly ratings. Still, there are several reasons that ratings still remain a relevant component in evaluating the WWE business model.
First of all, NBC Universal does care about their television ratings. They’ve earmarked hundreds of millions of the dollars to pay WWE with a relationship largely built on the history that WWE can deliver large weekly audiences and in turn, a boosting of value for cable channels such as USA Network and SyFy Network. Indeed, NBCU is planning to move WWE’s SmackDown from SyFy to the USA during Q1 of '16. If Raw stops being able to deliver the eyeballs, the WWE’s value to NBCU’s portfolio may greatly diminish.
Second, advertisers care about ratings. One of the interesting elements in today’s Q3 press release was a note that “37 new advertisers were secured for WWE programming following NBCUniversal’s upfront”. Largely, this advertising money would not be going directly to WWE, but rather NBCU. In some cases, WWE may directly benefit as advertisers may decide to integrate the advertising into the WWE programming (such as sponsorship of PPVs or in-program ads). Either way, the ability of WWE to combat the negative profile and low advertising revenue that professional wrestling has historically garnered is one of WWE’s key initiatives. WWE’s decision to pursue “PG” programming and go after blue-chip sponsors such as General Mills and Kraft is built around improving their image among advertisers.
Lastly, in order to gain and retain subscribers for the WWE Network, WWE needs to create new fans, create new superstars, and monetize their audience. Declining ratings demonstrate diminishing interest in the WWE.
WWE Network
As of September 30, 2015, the WWE Network had 1,233,000 paid subscribers. This number was up 6.6% from last quarter’s ending total of 1,156,100 paid subscribers. This actually exceeded the guidance WWE provided during last quarter’s press release of 1.2 million paid subscribers as of 9/30, growing 3-5% above 6/30 levels.
Over Q3 '15, WWE averaged 1,173,000 paid subscribers, down 3.4% from Q2’15 average of 1,215,170 paid subscribers. Overall, the WWE Network revenue for the third quarter of 2015 was about the same as the second quarter of 2015 at $36M. About one-third of the growth in subscribers came from international subscribers (+26,200, +12%). There were 50,700 additional domestic subscribers though the rate of growth in the United States which was only about 5%.
Since the launch of the WWE Network, there is a general subscription trend emerging. The peak for interest and acquiring new subscribers is during the first quarter in the Royal Rumble to WrestleMania season. Then, the remainder of the year is a gentle curve with slight variations which, thus far, have depended mostly on the external factors such as bringing online new external marketplaces.
In the past week, WWE has announced three new launches for the WWE Network: India (November 2015), Japan (January 2016), and Germany (January 2016).
Looking Forward
The remaining quarter (Q4 ’15) will include about 90 hours of new original content (compared to 85 hours in Q3’15). New programs will include the recent premiere of Breaking Ground, NXT Takeover: London from Wembley Arena, new episodes of WWE 24 and new episodes of the popular Stone Cold Podcast. Some analysts questioned whether WWE should be spending so much money on creating new content, but WWE officers defended the strategy, stating that they believed this content had a long tail effect and generated a lot of interest.
WWE did provide an estimate for Q4 ’15 WWE Network paid subscriptions (approximately flat to Q3’15 at 1.2 million), and were surprisingly cagey about putting out predictions for WWE Network in 2016.
To quote the press release, “Regarding WWE Network, given the inherent uncertainty of this nascent and growing business, management will not provide guidance for 2016 subscriber levels. However, the Company has evaluated other successful subscription businesses and observed a wide range of subscriber growth rates in the early stages of their development."
However, WWE then went on to point out that Netflix grew at an annual rate of 22% in their early days and that growing 20-25% for the WWE Network would be “very strong performance”. Surprisingly, many analysts on the conference call actually challenged WWE’s numbers as being too conservative since WWE Network is a worldwide service while Netflix was originally only a domestic service. While the Q1 peak for the WWE Network next year will likely be higher than Q1 ’15 (1.327M paid), it seems ambitious to assume that WWE would be able to average a full 1,500,000 paid subscribers throughout the entirety of 2016.
Even WWE confirmed internal expectations that 80% of the growth in the coming year would still be domestic and in light of flat live event numbers and sagging ratings, WWE Network's crystal ball remains very opaque.
Overall, the state of the WWE is solid. They have escalating television rights, a profitable WWE Network service, and a growing digital media footprint. However, the fundamentals for interest (ratings, attendance) still seem stuck in a general malaise. The company has rebounded from a tough 2014 and transformed from pay-per-view to over-the-top. Next year, we’ll see the continued roll-out of the WWE Network, the re-launch of the joint venture TapouT brand, an enormous WrestleMania 32, and the continued rise of the NXT brand. It should be interesting.
WWE announced their Q3 2015 earnings Thursday morning of $0.14 per share, beating Capital IQ Consensus of $0.08 per share. During the period of July 2015 to September 2015, WWE brought in $166.2 million in revenue while third quarter operating income was $17.9 million and adjusted OIBDA was $23.4 million.
Compared to the financial turbulence of 2014, this was a successful quarter with the highest adjusted OIBDA on record since Q2 of 2012. However, this good news wasn’t reflected in the WWE share price which dropped more than 10% since the market opened Thursday morning.
The key drivers for WWE growth have been the recognition of the escalating television rights which WWE negotiated in 2014 and the evolution of the WWE Network subscription model.
WWE has secured large growth from a bundle of key TV contracts (United States, United Kingdom, India, Thailand, Canada, Mexico and United Arab Emirates). Combined, these agreements were worth almost three-quarters of WWE’s total 2014 television rights revenue ($176M). In the latest earnings release, WWE finally provided an outline of the annual escalation expected for these contracts for 2015 & 2016.
Already, WWE has earned $175.5M year-to-date on television rights fees in 2015 compared to a nine-month number of $126.3M in 2014. While 39% annual growth is impressive, it’s worth noting that the plunge in WWE stock value last year was tied to WWE underdelivering against investor expectations for renegotiating their major US deal with NBC Universal. In fact, some investors felt so misled that lawsuits were filed.
Nevertheless, television rights remain the economic engine for WWE’s year-round growth. While some divisions have seasonal fluctuations (live events during the WrestleMania quarter, WWE Shop in December, licensing in Q1), WWE’s television rights contracts are structured so they continue to grow each quarter through the deal. Quarterly variations are largely driven by the scheduling of supplemental programming such as WWE’s reality shows Total Divas and Tough Enough, both which aired in Q3 of '15. While these additional programs bring in additional money and possible new audience/demographics, it was noted during today’s conference call that the cost of production for reality shows was much higher than the “in-ring” entertainment.
Recently, live WWE ratings have been their lowest levels since 1997.
Yet, WWE’s television rights agreements are not tied to weekly ratings. Still, there are several reasons that ratings still remain a relevant component in evaluating the WWE business model.
First of all, NBC Universal does care about their television ratings. They’ve earmarked hundreds of millions of the dollars to pay WWE with a relationship largely built on the history that WWE can deliver large weekly audiences and in turn, a boosting of value for cable channels such as USA Network and SyFy Network. Indeed, NBCU is planning to move WWE’s SmackDown from SyFy to the USA during Q1 of '16. If Raw stops being able to deliver the eyeballs, the WWE’s value to NBCU’s portfolio may greatly diminish.
Second, advertisers care about ratings. One of the interesting elements in today’s Q3 press release was a note that “37 new advertisers were secured for WWE programming following NBCUniversal’s upfront”. Largely, this advertising money would not be going directly to WWE, but rather NBCU. In some cases, WWE may directly benefit as advertisers may decide to integrate the advertising into the WWE programming (such as sponsorship of PPVs or in-program ads). Either way, the ability of WWE to combat the negative profile and low advertising revenue that professional wrestling has historically garnered is one of WWE’s key initiatives. WWE’s decision to pursue “PG” programming and go after blue-chip sponsors such as General Mills and Kraft is built around improving their image among advertisers.
Lastly, in order to gain and retain subscribers for the WWE Network, WWE needs to create new fans, create new superstars, and monetize their audience. Declining ratings demonstrate diminishing interest in the WWE.
WWE Network
As of September 30, 2015, the WWE Network had 1,233,000 paid subscribers. This number was up 6.6% from last quarter’s ending total of 1,156,100 paid subscribers. This actually exceeded the guidance WWE provided during last quarter’s press release of 1.2 million paid subscribers as of 9/30, growing 3-5% above 6/30 levels.
Over Q3 '15, WWE averaged 1,173,000 paid subscribers, down 3.4% from Q2’15 average of 1,215,170 paid subscribers. Overall, the WWE Network revenue for the third quarter of 2015 was about the same as the second quarter of 2015 at $36M. About one-third of the growth in subscribers came from international subscribers (+26,200, +12%). There were 50,700 additional domestic subscribers though the rate of growth in the United States which was only about 5%.
Since the launch of the WWE Network, there is a general subscription trend emerging. The peak for interest and acquiring new subscribers is during the first quarter in the Royal Rumble to WrestleMania season. Then, the remainder of the year is a gentle curve with slight variations which, thus far, have depended mostly on the external factors such as bringing online new external marketplaces.
In the past week, WWE has announced three new launches for the WWE Network: India (November 2015), Japan (January 2016), and Germany (January 2016).
Looking Forward
The remaining quarter (Q4 ’15) will include about 90 hours of new original content (compared to 85 hours in Q3’15). New programs will include the recent premiere of Breaking Ground, NXT Takeover: London from Wembley Arena, new episodes of WWE 24 and new episodes of the popular Stone Cold Podcast. Some analysts questioned whether WWE should be spending so much money on creating new content, but WWE officers defended the strategy, stating that they believed this content had a long tail effect and generated a lot of interest.
WWE did provide an estimate for Q4 ’15 WWE Network paid subscriptions (approximately flat to Q3’15 at 1.2 million), and were surprisingly cagey about putting out predictions for WWE Network in 2016.
To quote the press release, “Regarding WWE Network, given the inherent uncertainty of this nascent and growing business, management will not provide guidance for 2016 subscriber levels. However, the Company has evaluated other successful subscription businesses and observed a wide range of subscriber growth rates in the early stages of their development."
However, WWE then went on to point out that Netflix grew at an annual rate of 22% in their early days and that growing 20-25% for the WWE Network would be “very strong performance”. Surprisingly, many analysts on the conference call actually challenged WWE’s numbers as being too conservative since WWE Network is a worldwide service while Netflix was originally only a domestic service. While the Q1 peak for the WWE Network next year will likely be higher than Q1 ’15 (1.327M paid), it seems ambitious to assume that WWE would be able to average a full 1,500,000 paid subscribers throughout the entirety of 2016.
Even WWE confirmed internal expectations that 80% of the growth in the coming year would still be domestic and in light of flat live event numbers and sagging ratings, WWE Network's crystal ball remains very opaque.
Overall, the state of the WWE is solid. They have escalating television rights, a profitable WWE Network service, and a growing digital media footprint. However, the fundamentals for interest (ratings, attendance) still seem stuck in a general malaise. The company has rebounded from a tough 2014 and transformed from pay-per-view to over-the-top. Next year, we’ll see the continued roll-out of the WWE Network, the re-launch of the joint venture TapouT brand, an enormous WrestleMania 32, and the continued rise of the NXT brand. It should be interesting.
Talent not happy
While morale at NXT is through the roof, the main roster has been described as having a big divide between the have’s and have not’s. The lower level talent with $100,000 downsides, which would be the bottom guys, were raised to $125,000, and probably others got raises as well to offset the lack of PPV bonus money. There are underneath guys complaining about having a hard time making it given road expenses. The top guys are being well taken care of.
While morale at NXT is through the roof, the main roster has been described as having a big divide between the have’s and have not’s. The lower level talent with $100,000 downsides, which would be the bottom guys, were raised to $125,000, and probably others got raises as well to offset the lack of PPV bonus money. There are underneath guys complaining about having a hard time making it given road expenses. The top guys are being well taken care of.
The Uso's ready to Return
One of the reasons for the Dudleys quick phase-down is that Jey Uso is ready to return from shoulder surgery so the Usos team should be starting back and are likely ready to be groomed for the top babyface tag team spot against New Day. The twins are back training together in Orlando in the ring so Jey is cleared and should be back shortly.
One of the reasons for the Dudleys quick phase-down is that Jey Uso is ready to return from shoulder surgery so the Usos team should be starting back and are likely ready to be groomed for the top babyface tag team spot against New Day. The twins are back training together in Orlando in the ring so Jey is cleared and should be back shortly.
WWE Official Signings
WWE made an announcement this week of 19 new signees. Many aren’t new and most have been reported here already. Those previously reported here are Mada Abdelhamid (Tough Enough), Daria Bereneto (Tough Enough) , Josh Bredl (Tough Enough), Patrick Clark (Tough Enough), Sara Lee (Tough Enough), Zamaraiah Loupe (ZZ from Tough Enough), Eddie Orengo (Bandido Jr.), Adrienne Reese (Athena, who has already been working NXT shows), Amanda Saccomano (Tough Enough), Gzim Selmani (a 6-foot-3, 265 pound heavyweight former MMA fighter and kickboxer. He has a 4-2 MMA record who fought once in Bellator in a prelim fight on October 24, 2014, losing, but headlined a BAMMA show in London in 2014 beating former UFC fighter Oli Thompson, who started in Orlando in May), Christopher Girard (Biff Busick) and Rich Swann.
New names that haven’t been reported here start with Cezar Bononi of Sao Paulo, Brazil, who was the starting tight end and team captain of the Brazilian national team in American football. He has done indie pro wrestling with the Brazilian Wrestling Federation. He had a tryout back in January, and was actually signed and been in Orlando since June. He wrestled in Brazil as Big Block and was billed at being 7-foot-2, although he’s probably closer to 6-foot-9. Gabriel and Uriel Ealy of Milwaukee are identical twin brothers who are big bodybuilders, looking like they are about 6-foot-4 or so. Dallas Harper is an independent wrestler who has worked with Anarchy Wrestling in Cornelia, GA and was a high school basketball star center at Perry High in Massilon, OH and was on the Division II Malone College team in 2012, although never played in a game. He blocked 114 shots in his senior year of high school and was second team all-league. He’s 6-foot-10. I think we’re picking up a pattern that the company feels it’s lacking in giants. Daniel Mathis, who trained at OVW, was an offensive lineman at the University of Pittsburgh and was first-team All-State as a junior and senior at McDowell High School in Erie, PA
WWE made an announcement this week of 19 new signees. Many aren’t new and most have been reported here already. Those previously reported here are Mada Abdelhamid (Tough Enough), Daria Bereneto (Tough Enough) , Josh Bredl (Tough Enough), Patrick Clark (Tough Enough), Sara Lee (Tough Enough), Zamaraiah Loupe (ZZ from Tough Enough), Eddie Orengo (Bandido Jr.), Adrienne Reese (Athena, who has already been working NXT shows), Amanda Saccomano (Tough Enough), Gzim Selmani (a 6-foot-3, 265 pound heavyweight former MMA fighter and kickboxer. He has a 4-2 MMA record who fought once in Bellator in a prelim fight on October 24, 2014, losing, but headlined a BAMMA show in London in 2014 beating former UFC fighter Oli Thompson, who started in Orlando in May), Christopher Girard (Biff Busick) and Rich Swann.
New names that haven’t been reported here start with Cezar Bononi of Sao Paulo, Brazil, who was the starting tight end and team captain of the Brazilian national team in American football. He has done indie pro wrestling with the Brazilian Wrestling Federation. He had a tryout back in January, and was actually signed and been in Orlando since June. He wrestled in Brazil as Big Block and was billed at being 7-foot-2, although he’s probably closer to 6-foot-9. Gabriel and Uriel Ealy of Milwaukee are identical twin brothers who are big bodybuilders, looking like they are about 6-foot-4 or so. Dallas Harper is an independent wrestler who has worked with Anarchy Wrestling in Cornelia, GA and was a high school basketball star center at Perry High in Massilon, OH and was on the Division II Malone College team in 2012, although never played in a game. He blocked 114 shots in his senior year of high school and was second team all-league. He’s 6-foot-10. I think we’re picking up a pattern that the company feels it’s lacking in giants. Daniel Mathis, who trained at OVW, was an offensive lineman at the University of Pittsburgh and was first-team All-State as a junior and senior at McDowell High School in Erie, PA
