SmackDown Live Moving to Fox Network Television, WWE Signs $1 Billion Agreement

SmackDown

Fox Sports has confirmed reports that the Fox broadcast network (FOXA) will be the home of WWE SmackDown Live, effective Friday October 4, 2019. The 5-year deal, worth an estimated +/- $200 million annually, gives Fox exclusive rights to the “2nd-longest running weekly episodic cable television show in U.S. prime time history” (Monday Night RAW is 1st). By signing with Fox, the show will move from cable to network television; though it will air on Friday evenings, the least watched television night. In related news, USA Network has announced that is has renewed its contract with the WWE to retain the exclusive broadcast rights to Monday Night RAW.

Howie Long-Short: This isn’t news as much as it is confirmation for JWS readers, as we first wrote of the deals back on May 22nd. Come 2019, Monday Night RAW and SmackDown Live will generate 3.6x ($468 million/year) what the company currently brings in ($130 million) for its 2-weekly prime-time shows. WWE isn’t done yet either, broadcast deals in 5 of their 6 largest international markets are also coming up for renegotiation. WWE now projects the company’s 7 largest TV deals in aggregate will grow from $235 million in 2018 to an average of $542 million by 2021.

The formal announcement of the Monday Night RAW and SmackDown Live deals sent WWE shares up +9.5% last week ($72.82). WWE is up +67% since the news first broke in mid-May and has grown +260% over the last 12 months. Of course, WWE is having success on both the television and streaming fronts; reporting WWE Network (OTT platform) paid subs grew 5% to 1.56 million in Q1 ‘18.

Fan Marino: Vince McMahon has committed to spending $500 million, not the $100 million originally reported, on the XFL over the first 3 years. Players (40 man rosters, +/- $75,000 salaries), coaches and a “broad-based insurance plan” (cost min. $10 million/year) are expected to be the biggest expenses. The league is scheduled to debut in February 2020. While $500 million will give the league some runway, I simply don’t think the competition level will be good enough to give it staying power; and if a wave of top high school prospects decided to forego college to pursue pro careers in the XFL, the NFL would simply renegotiate their CBA to enable HS prospects to enter the 2021 draft. The current NFL CBA expires following the 2020 season. It’s worth noting that WWE shares are up 117% since Vince sold $100 million worth in January, money he’s using to fund the startup league.

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Author: John Wall Street

At the intersection of sports & finance.

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