WWE’s Major Deal with ESPN
The WWE’s announcement of a $1.6 billion media rights deal with ESPN on Wednesday has generated significant excitement, particularly regarding its implications for the company’s slate of 10 annual “premium live events,” including the iconic Wrestlemania.
Focus on Wall Street
Despite the enthusiasm surrounding the agreement, TKO Group Holdings, the parent company of WWE, saw a nearly 3% decline in its stock price, landing around $159 by afternoon trading. TKO, led by former Endeavor chief Ari Emanuel, is expected to release its second-quarter earnings report later today.
Analyst Insights
Lance Vitanza, an analyst from Cowen & Co., expressed optimism about the deal, stating it exceeded expectations and is favorable for TKO’s ongoing discussions with Disney and ESPN regarding UFC pay-per-view rights. He estimated that this wrestling agreement could raise TKO shares by approximately $6.
Financial Expectations Not Met
However, the deal’s average annual value of $325 million fell short of the anticipated $340 million, a point noted by Eric Handler of Roth Capital Partners. Despite this, Handler maintained a “buy” rating for TKO shares, though initial reports caused him to question whether WWE’s extensive content library would be included in the agreement.
Comparing Previous Deals
The current deal with ESPN follows WWE’s 2020 arrangement with NBCUniversal’s Peacock that was influenced by a need for programming during the pandemic-related delay of the Tokyo Olympics. That deal encompassed a variety of WWE content, previously offered on a dedicated WWE streaming service.
ESPN’s Commitment to WWE
In a statement accompanying the announcement, ESPN Chairman Jimmy Pitaro celebrated WWE’s “immense, devoted and passionate fanbase” and emphasized that this partnership will be pivotal in shaping ESPN’s streaming landscape. Mark Shapiro, TKO’s President and COO and a former ESPN executive, remarked that this deal arrives at a crucial moment for ESPN as it expands its streaming offerings.
Wider Industry Context
The introduction of WWE programming coincided with ESPN’s announcement of new NFL broadcasting rights and a significant equity deal with the league, marking a transformative period for the network amidst its evolving content strategy.
