Current WWE TV Rights Negotiations Are the Most Important in Company History

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Current WWE TV Rights Negotiations Are the Most Important in Company History
Mark A. Wallenfang/Getty Images
Vince McMahon

The changing landscape of WWE's television programming continues to be the biggest story in the business end of the company, and it will likely stay that way for at least the next year or so.  In addition to the many ongoing rumors about the impending WWE Network project, WWE's domestic television contracts are all set to expire in 2014.

There are some new details in a story Marc Graser published at Variety.com.  The big one is that WWE has worked hard over the last two years to get all of their contracts to expire at the same time: If one of the big media conglomerates wants a big exclusive package deal to spread across their networks, they can do it.  This was the type of deal WWE had with Viacom from 2000 to 2005.

As has been the pattern with WWE as of late, it pushes the value of Raw and other WWE programming as live "DVR-proof" shows.  Chief Revenue and Marketing Officer Michelle Wilson explained to Graser that "We’ve had to evolve our thinking.  We are clearly entertainment-based, but if you think about the characteristics of our brand, it’s live action, and that’s sports. We want to be compensated for a live audience, since live content is getting a very significant premium in the marketplace."

Last week at an investors' conference, transcribed by SeekingAlpha.com (free registration required), it seemed like Chief Strategy and Financial Officer George Barrios felt the demand for live programming went further than sports:

The only thing that’s viewed live nowadays at that scale is us and sports, entertainment hovers 50% to 75% and frankly live content right now is the unique value proposition for network. It's why a few days ago NBC put Sound of Music live. Somebody told me they didn't like the show, did great numbers but it’s live. Everybody wants live and so we think our ability to deliver live content and own it all gives us a unique opportunity.

WWE is zeroing in on NASCAR as the sport it makes the most direct comparisons with.  For about the same amount of programs each year, WWE averages a higher household rating (percentage of all American homes with a TV) in addition to being viewed by younger, more diverse fans.  NASCAR viewers are 92 percent white and over 50 years old, while 44 percent of the more ethnically diverse WWE audience is under 34 years old.

As WWE's shows sit right now, 90 percent of Raw and SmackDown viewers watch the shows live or within the next day, performing similarly to major sports.  Obviously, the programming is more valuable if it's actually broadcast live, though, and right now, Raw is WWE's only live weekly show.  According to the Variety.com article, though, WWE is considering taking SmackDown live if a network was to make it worth the promotion's while.

A live SmackDown would likely move to a different night of the week, though, as WWE is pretty locked into its current touring schedule.  Not only is it easier to produce shows on consecutive days in cities close to each other, but much of the production staff works on traditional sporting events over the weekend.  Taking the Tuesday shoot live is what makes the most sense.

WWE Historical Television Rights Fees (Dollar figures in millions)
Year Domestic International Total
2006 $54.9 $30.6 $85.5
2007 $59.6 $32.8 $92.4
2008 $63.5 $37.2 $100.7
2009 $72.8 $39.1 $111.9
2010 $81.6 $45.4 $127.0
2011 $80.3 $51.2 $131.5
2012 $88.9 $50.6 $139.5
2013 (Projected) $106.1 $62.3 $168.4

Corporate.WWE.com & IndeedWrestling.com

I'm going to quote the next sentence in its entirety because it's clearly worded carefully: Graser wrote that "WWE already has reached out to or held meetings with the expected list of players who own a variety of channels hungry for programming, including A&E, Disney, Viacom, 21st Century Fox and Discovery."  

While I could see Total Divas on a number of networks, the companies that make the most sense are Viacom and Fox.

As I noted earlier, WWE has had all of its programming on Viacom networks in the past.  WWE programming would be be a huge asset to Spike TV right now, especially to try to push Bellator MMA.  When UFC's popularity first exploded, it was with the first season of The Ultimate Fighter as the lead-out of Monday Night Raw, and Bellator did its best consistent numbers with TNA Impact Wrestling as its lead-in.

If Viacom were to make a move for WWE, it could very well be the end of TNA.  TNA's evolved (devolved?) into what is almost solely a television product.  The promotion has no pay-per-view events announced, the house show schedule has been reduced and talent costs have (rightfully) been cut drastically so it can make profits on rights fees.

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I suppose it's possible TNA could find another outlet, but honestly, it was lucky Spike TV still wanted wrestling since it's not like anyone else has when Spike lost WWE.  When WWE had left for Viacom, then USA head Barry Diller was famously quoted as saying that with wrestling fans, "[An] audience of twelve-to-nineteen-year-old pimply face, mean-spirited males came, watched, and went on to whatever God-awful other pursuits."

Bidding for WWE cannot start until February 15th, the end of Comcast/NBC Universal's exclusive negotiation period to keep WWE on their family of cable networks.  The other bids must be in by February 28th, and WWE will make its choice by March 4th.

However, it's unlikely WWE will be going anywhere.  Variety cites "industry insiders" as saying there's "no way" Comcast/NBCU will let WWE go, as Raw is what makes USA the top basic cable network.  Without Raw?  USA would be in fourth place.  All other WWE programming has very much outperformed its predecessors, too.

In a statement to Variety, Vince McMahon said:

WWE is a proven ratings juggernaut, making USA Network No. 1 for the past eight years and delivering more average viewers than every sports property, with the exception of the NFL.  Given the increasing demand for live, DVR-proof content, we believe the market will value our programming significantly above where we’ve been in the past.

I think there's no doubt the rights fees (projected at about $106.1 million domestically for 2013) will go up.  The question is by how much.

 

David Bixenspan has been Bleacher Report's WWE Team Leader and a contracted columnist since 2011. You can follow him on Twitter @davidbix and check out his wrestling podcasts at LLTPod.com.

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