World Wrestling Entertainment (NYSE: WWE) is an anachronism in today’s media environment. The company wrestling marks call the WWE relies on one kind of entertainment (pro wrestling) in an environment dominated by conglomerates that sell many varieties of entertainment.
For example, Disney (NYSE: DIS) owns streaming services (Hulu, Disney+, ESPN+), theme parks, a comic book publisher (Marvel), three movie studios, an animation house, and many TV networks (ABC, ESPN, etc.). In comparison, all WWE has its wrestling shows and a library of wrestling videos.
Moreover, WWE (WWE) is one of the few entertainment companies still heavily reliant on live shows. Viewers of WWE will note the many ads for the company’s live shows and the announcers constant hocking of tickets.
Thus, many people will consider WWE a dinosaur. To explain, World Wrestling Entertainment (WWE) is a holdover from an earlier era of entertainment that has survived into the modern age.
I attribute WWE’s survival to the reality that snobbish entertainment executives find wrestling distasteful. However, those executives enjoy the revenues and ratings wrestling generates, so they tolerate the WWE’s existence to avoid owning a wrassling promotion.
Is WWE making money?
The WWE (WWE) is making a little money from wrestling. World Wrestling Entertainment reported a quarterly gross profit of $106.65 million and a quarterly operating income of $63.94 million on 30 September 2021.
In comparison, WWE reported a quarterly gross profit of $103.04 million and a quarterly operating income of $63.38 million on 30 September 2020. Moreover, WWE’s quarterly revenues grew from $221.59 million on 30 September 2020 to $255.85 million on 30 September 2021.
Conversely, WWE reported a quarterly operating cash flow of $59.64 million and a quarterly ending cash flow of -$51.57 million on 30 September 2021. The quarterly operating cash flow fell from $116.84 million on 30 September 2020, while the quarterly ending cash flow fell from $94.85 million on 30 September 2020.
The WWE makes less money
The WWE can generate cash. It reported a quarterly ending cash flow of $300.42 million on 31 March 2021. However, the WWE’s cash and short-term investments fell from $638 million on 30 September 2020 to $449 million on 30 September 2021.
Additionally, the WWE lost value during the pandemic. The WWE’s total assets shrank from $1.297 billion on 30 September 2020 to $1.167 billion on 30 September 2021.
The only good news I found in WWE’s financial numbers was its total debt. The total debt shrank from $818 million on 30 September 2020 to $614 million on 30 September 2021.
These numbers show why there is online speculation that WWE CEO Vincent K. McMahon Jr. is planning to sell his company. The numbers show the WWE could no longer be a viable standalone company.
Can the WWE Survive?
I think World Wrestling Entertainment (WWE) is a viable organization but not a viable company. To explain, I think WWE could survive and make money as part of a larger organization.
Notably, WWE is still beating its upstart rival All Elite Wrestling (AEW) in the ratings. For example, Forbes estimates WWE’s SmackDown show had 1.99 million viewers on 12 November 2021. In comparison, AEW’s Rampage had 502,000 viewers down 14% from the week before.
Comparing SmackDown’s ratings to Rampage’s is unfair as wrestling industry legend Eric Bischoff notes. To explain, they run Rampage on the TNT cable network while they show SmackDown on the Fox broadcast networking. Hence, SmackDown has a larger viewer base to draw upon.
On the other hand, when they moved SmackDown to cable because of the World Series, Rampage received better ratings, Bischoff points out. Bischoff knows something about wrestling and ratings. He was the boss at World Champion Wrestling when that company WWE in the Monday Night ratings wars of the 1990s.
AEW vs. WWE who will win?
However, AEW Dynamite was the fourth most viewed cable show on Wednesday 27 October 2021, ShowBuzzDaily estimates. ShowBuzz estimates Dynamite received 941,000 viewers which is tremendous in today’s cable TV environment. Notably, the top rated cable show on cable on 27 October 2021, the NBA regular season received 1.073 million viewers.
I think WWE has an AEW problem, Tony Khan’s wrestling promotion is competitive. Khan’s wrestling programming is finding an audience which should scare Vince McMahon to death.
Interestingly, the AEW/WWE reminds me of the Marvel vs. DC conflict in the comic book business. To explain, in the 1950s and early 1960s, dominated comics by offering sanitized larger-than-life superheroes that embodied writers’ ideals (IE Batman, Superman, Wonder Woman).
Can Comic Books Explain AEW’s Success?
Marvel beat DC with a strategy I call misfit heroes. To distinguish itself from DC, Marvel began publishing comics featuring flawed and often unheroic but very human superheroes. Characters such as Spider-Man, The Thing, The Hulk, and The X-Men. The strategy worked by the 1970s, Marvel was the number comic publisher.
Today, WWE offers wrestling characters reminiscent of DC superheroes. Larger than life individuals who embody Vince McMahon’s ideals, for example Big E, Drew McIntyre, and John Cena. WWE’s superstars like DC’s superheroes show few flaws or weaknesses.
The AEW, on the other hand, touts its wrestlers flaws. For example, C.M. Punk monologues about needing to heal, and Eddy Kingston’s gripes about Punk’s showboating. When former AEW champ Johnny Moxley entered rehab for alcoholism, owner Tony Khan Tweeted the fact. Kingston has done Moxley one better by admitting his battles with mental illness and use of psychiatric drugs.
Many AEW stars seem to revel in their weakness. For example, MJF glories in his obnoxious arrogance, while Darby Allin admits he once slept in his car because he could not afford a home. Similarly, recent shows spotlighted current champ Hangman Page’s conflict with ex friend and ex-champ Kenny Omega.
Another rising AEW star Jungle Boy Jack Perry is a (gasp) small and somewhat effeminate looking man. Similarly, Eddie Kingston is visibly fat, while Allin is skinny.
AEW is Winning the Wrestling Wars by Being Human
The strategy of focusing on characters’ humanity helped Marvel triumph in the comic book wars. A similar stratagem could enable AEW to win the new wrestling wars.
In particular, Eddie Kingston’s growing popularity reminds me of the rise of Stone Cold Steve Austin back in the late 1990s. Like Austin, Kingston’s persona is that of a grumpy middle-aged man who has been badly used by the system. Incredibly, Kingston stole the super popular C.M. Punk’s thunder at the recent Full Gear pay-per-view.
AEW’s misfit heroes’ strategy seems to be working. Tony Khan is attracting viewers by giving marks wrestlers they can identify with. For example, Bryan Danielson, a star who looks like he should be bagging groceries at your local Kroger rather than competing in a main event.
Can WWE win the Streaming Wars?
Most of all, AEW could have the backing of a major entertainment conglomerate, WarnerMedia-Discovery which could soon trade on the NASDAQ as WBD. AEW’s shows are running on WarnerMedia’s TNT cable channel, although Dynamite will move to TBS in early 2022.
In addition, AEW programming could soon appear on WarnerMedia’s HBOMax and Global HBO streaming services. HBOMax had 45.2 million US subscribers in September 2021, The Hollywood Reporter estimates. In addition, HBOMax and Global Max had 67.5 million subscribers in September 2021.
In contrast, NBCUniversal’s Peacock; which offers WWE programming, had 20 million active monthly accounts and 54 million subscribers in September 2021, The Wrap estimates. Thus, WWE has an edge in the streaming wars that could help it survive.
In conclusion, I think WWE (WWE) is in trouble and Mr. Market overpaid for its stock at $52.66 on 19 November 2021. I think WWE is a company in decline. I advise investors to avoid WWE because I think this stock and company are heading for a fall.
Originally published at https://marketmadhouse.com on November 19, 2021.
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