What's the Main Event for This Entertainment Company?
Jun 29th 2012 1:53PM
Updated Jun 29th 2012 4:18PM
World Wrestling Entertainment (NYS: WWE) is, like a pumped-up wrestler, strengthening its slate of TV offerings. The company announced that it had inked a deal with privately held ION Television to broadcast a new one-hour show, WWE Main Event, on the cable network starting this coming October. This is a good time for fresh product from the struggling "sports entertainment" purveyor; the company's growth has been stagnant or even nonexistent lately.
TV is good for you
Main Event should fill out WWE's schedule nicely. Airing on Wednesday nights, it'll be neatly sandwiched between its two flagship live shows. Raw is broadcast Monday nights on cable's USA Network, owned by Comcast's (NAS: CMCSA) and GE's (NYS: GE) NBCUniversal. On Friday nights, SmackDown thunders across the airwaves on another NBCUniversal cable channel, Syfy.
The company's press release was a little circumspect as to the content of the new program, saying that it would feature its star wrestlers and "divas" (i.e., female wrestlers) from both Raw and SmackDown, and the proceedings would "fit seamlessly" in the storylines from those programs.
WWE is a company that relies heavily on TV; it's the segment that contributes most significantly to revenue, responsible for around 26% of total top line in the most recent quarter. And the segment hasn't been advancing much -- during the quarter it drew $32.5 million, an anemic 3% over the same period of 2011.
It's a more critical segment than that 26%-of-revenue figure would indicate. This is because TV is the key contact point for the WWE audience, and as such it's an advertising platform that drives sales in the remaining segments. These include live events (revenue generator No. 2), Pay-Per-View, licensing for the company's merchandise, and even movies put out by the company's underperforming WWE Studios.
This will almost certainly continue to hold true, even with the proliferation of digital media and the firm's active participation in the online sphere. It's got a lively website with plenty of fresh multimedia content, and has a branded channel on and licensing agreement with Google's (NAS: GOOG) YouTube.
The company's "Fan Nation" channel has loads of content and draws views from the more dedicated audience members, who click on the many "behind-the-scenes" type of videos available, not to mention the in-ring action clips. Some of these total view numbers reach well into the six figures, providing yet more marketing opportunities for the company and some pocket change in revenue from that licensing agreement.
Body-slamming the demographics
Regardless, WWE's television presence remains the most critical element of its business. ION TV doesn't quite have the familiar brand name enjoyed by USA Network or even Syfy, but its presence is just as strong. It reaches nearly 100 million households in America, more or less the same as USA Network, and approaches the 150 million of Syfy. So Main Event should bring in audience numbers comparable to the two established shows.
Which would be rather pleasant for the company. Both SmackDown and Raw perform pretty well, with the former coming in as the No. 5 (out of 22) top-rated cable prime-time show this past Friday, and the undisputed No. 1 in the crucial 18-to-49-year-old category. With just under 3 million viewers, it beat such long-established programs as Tyler Perry's House of Payne airing on Time Warner's (NYS: TWX) TBS, which was seen by 1 million or so fewer pairs of eyeballs (total viewership: 1.7 million).
More crucially, the show trumped mixed-martial-arts offering UFC Fight Night on News Corp.'s FX network. One big concern for WWE shareholders is the tough competition from MMA, which features real and intense hand-to-hand combat, as opposed to the wrestling company's scripted and sometimes comedic variety. The grapplers are holding their own in this battle; SmackDown's total viewership was more than double that of UFC Fight Night, while it had 1.2 million 18-to-49-year-olds tuning in to watch it versus 921,000 for UFC's show.
Raw, meanwhile, airs on a night when more people are watching TV. Plus, it doesn't have to face competition from any MMA offering. Perhaps, as a result, it's been drawing a bigger audience than SmackDown -- around 5 million or so on June 18, with approximately 46% of them being 18-49 year olds. That was good enough to place it at No. 3 in the cable standings, ahead of shows with big niche audiences like The Real Housewives of New York City on NBCUniversal's Bravo, and History's American Pickers.
So, the more quality airtime WWE can secure for its programming, the better. The company still needs to produce more revenue from it in order to grow significantly, however, so let's see if it can pull this off come October.
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The article What's the Main Event for This Entertainment Company? originally appeared on Fool.com.Fool contributor Eric Volkman owns shares of WWE, but probably wouldn't survive more than a few seconds in a wrestling ring. The Fool owns shares of Google. Motley Fool newsletter services have recommended buying shares of Google. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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