Why the WWE Network May Be the Beginning of the WWE's End

Imaan Jalali@imaanjalaliFeatured ColumnistFebruary 3, 2012

Photo courtesy of WWE.com
Photo courtesy of WWE.com

The WWE Network is slated to carry the next generation of WWE programming. However, due to a number of issues already surrounding the yet-to-be-launched network, there is a chance it may even be dead on arrival.

Assuming it does come to fruition, there are still a multitude of factors that may preclude Vince McMahon's newest enterprise from being successful.

If it were to fail, it would hardly be a surprise. McMahon, for all his wrestling genius, has fallen on his rugged face every time he's attempted to expand his stranglehold on the entertainment scene.

Case in point, the WBF, WWF/E New York Restaurant, SmackDown Records and the XFL have all cost the WWE millions of dollars due to a lack of foresight and proper execution. The latter in particular, which was intended to be an alternative to the NFL, rendered McMahon nearly $70 million poorer.

In the same vein as McMahon's previous failed endeavors, the WWE Network is already showing signs of a startling lack of vision beyond the actual start date. Even so, the launch date has been postponed from April 1, the day of WrestleMania 28, to sometime in the fall of 2012.

When a company can't even come through on the proposed day the network is supposed to become a reality, a red flag should immediately pop up.

More so than the postponement, though, are three obstacles that may ultimately spell the demise of the WWE. The biggest includes a notable lack of planning, followed by the loss of pay-per-view revenue, and, lastly, the missing blueprint for how the company intends to make it a profitable venture.

Having already been postponed, the WWE Network has had a striking lack of planning go into it
Having already been postponed, the WWE Network has had a striking lack of planning go into it

The lack of planning is the central linchpin and cause of all problems that will arise with respect to the WWE Network.

The most pressing question is, who will exactly run the network?

According to Bryan Alvarez's Figure Four Weekly Newsletter and SportsBusinessJournalDaily.com, not only has a network head not been named, but there is confusion as to whether an additional 200 employees will be hired to run the WWE Network. If not, the existing 500 WWE employees will have to double their already burdensome workload. In fact, they wouldn't have a choice because, according to The Wrestling Observer Newsletter, several unemployed entertainment executives are already turning down the network.

Not to mention, the WWE expects the network to be carried in a whopping 40 million homes, which entails that the company cuts deals with all the major satellite distributors (i.e., Comcast, InDemand, Cox, Time Warner Cable and Bright House Networks). But how likely is that, considering the fact that wrestling isn't exactly a hot commodity right now?

Also, what type of programming would the network feature, anyway? Besides conjecture about featuring professional team sports, a SportsCenter-style show named Livewire, a Surreal Life-inspired Legends House and a series about cruiserweights, there is very little set in stone. Worst of all, a 24-hour network necessitates a plethora of repeat programming, overexposure of content and the dilution of a quality product.

Next, how does the WWE expect to handle the loss of valuable pay-per-view revenue if "most, if not all" of its monthly events are to be transitioned over to the WWE Network?

If they are to be featured exclusively on the network, how does the WWE intend to recoup the loss of PPV revenue?
If they are to be featured exclusively on the network, how does the WWE intend to recoup the loss of PPV revenue?

At up to $54.95 per event—not including WrestleMania—the WWE pockets millions of dollars for even the pay-per-views that underperform. Supposing the WWE only moves its "B" shows over to the network, that would still be an astronomical sum to be forfeited with the expectation that the loss in revenue would be recouped via subscriptions alone.

Just to give one an idea of how significant pay-per-view dollars are, the WWE took in nearly 16 million in revenue in just the third quarter of 2011, according to PWTorch.com. Multiplied by four, that is over $60 million the WWE would be relinquishing with the hope that the WWE Network would be a resounding success. Needless to say, it's not sagacious of the WWE to be putting their biggest eggs in one unsturdy basket.

Last but not least is the all-important strategy in which the WWE would ensure the WWE Network is a profitable venture, as opposed to an abject failure.

In other words, the network will have to rely on a prudent subscription and advertising model to compensate for the sacrifice of pay-per-view revenue. The only problem is that, according to Dave Meltzer's Wrestling Observer Newsletter, the company not only has no such model, but a steady stream of advertising dollars would be a virtual impossibility. The reason being is that the fledging network would be bargaining from a position of having a shaky programming agenda and no quantifiable viewership history.

Piggybacking on Meltzer's insight is impresario and former WWE writer Court Bauer, who confirms the absence of a business plan to monetize the network.

Additionally, Bauer makes the argument that if Raw and SmackDown ad rates are floundering—and ad partners are dwindling—a logical extrapolation to make is that the network will be even worse off. Considering the gargantuan investment the company intends to make—including expanding its home production base—there is too much at stake to fail.

Taking into consideration historical precedents and the current economic milieu, the WWE will have to reassess its priorities with the WWE Network if it hopes to see it succeed.

Otherwise, the network will prove to be a financial disaster like the company's past failed ventures. Unlike the XFL or WBF, however, the WWE Network's downfall may be the first of many cracks that threaten to crumble the WWE's foundation.

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