Monday Night Raw and SmackDown Live – WWE’s flagship programs – experienced drastic year-over-year ratings declines through the first half of 2019. WWE co-president George Barrios blamed the Q1 drop-off in eyeballs on a series of injuries that prevented some of the biggest superstars from performing in-ring, but with a healthy roster – and WrestleMania (biggest PPV of year, resets storylines) – failing to give Raw and SmackDown the Q2 boosts expected, the pro wrestling promotion decided to take creative in another direction. In June, the company announced that Paul Heyman (see: ECW ’93-’01) and Eric Bischoff (see: WCW from ’91-’99) – legends of the Monday Night Wars era – would be taking creative control over Raw and SmackDown, respectively. The hope is that the well-respected duo can come up with storylines that will once again make the weekly shows appointment programming.
Howie Long-Short: WWE was a Wall Street darling in 2018. With the company signing long-term broadcast deals for both Raw and SmackDown worth a combined $2.35 billion (+213% increase in annual value), shares rose +138% over the twelve-month period. But declining television viewership, slowing network subscription growth, a drop-off in gate receipts and merchandise sales and the emergence of a formidable domestic competitor (see: AEW) has spooked investors in 2019; the company’s market cap is down -27% since it reported underwhelming first quarter results back in April.
Investors aren’t the only ones unnerved by WWE’s H1 struggles, Variety reported that executives at both NBCUniversal (Raw) and Fox (SmackDown) are “getting nervous” that they may have overpaid on the 5 year pacts scheduled to start later this year. While the two programs remain amongst the highest rated on weekly television, the downturn in viewership has been pronounced (Raw -20% YoY, SmackDown -17 YoY); tune-in figures were pretty consistent between 2017 and 2018. It does need to be noted that USA Network and Fox don’t need to pull the as large of an audience as WWE has been able to command in recent years (regularly over 3 million) – they simply need to beat the other programming in their time slots.
Barrios offering up “superstar absences” as an explanation for Q1’s soft numbers was ridiculous considering just a single male wrestler missed the entire quarter (Bray Wyatt). The balance of the names he cited on the company’s earnings call either missed minimal time or are considered early to mid-card talents (i.e. had no impact on ratings). And of course, wrestlers aren’t limited to in-ring appearances, either; with 5 hours of weekly programming to fill (NXT excluded), there are no shortage of opportunities for back-stage skits, promos and in character interviews.
Industry insiders believe that WWE has watered down its product – that there’s simply too much wrestling on television; 5 hours of live programming/week (+ NXT on WWE Network) inevitably leads to lulls in the show and viewers tuning out. “A lack of distinction between the 2 flagship shows (see: too much roster crossover), the loss of the company’s biggest draw (see: John Cena) and a women’s division that’s been poorly booked and force fed to viewers” were all also mentioned as possible explanations for the ongoing struggles.
While it may sound as if the sky is falling, “struggling entertainment properties don’t do $17 million live gates (WrestleMania 35); they also don’t generate $1 billion in annual revenues.” There is reason to believe that despite the headwinds referenced above, WWE’s Q2 earnings report will exceed analyst expectations. One source familiar with the business told JohnWallStreet that WWE’s “Q2 financials are set to include both WrestleMania and the Saudi show; and the company’s operating income goes through the roof anytime they do an event in the KSA. It’s $25 million to $30 million directly to the bottom line.” We’ll find out on Thursday when WWE announces its second quarter results.
Fan Marino: To be clear, it’s not as if the WWE hasn’t tried to shake things up to renew fan interest – it’s just that ideas like the addition of a silly ‘24/7’ title and a wildcard rule that further blurs the lines between the two programs have simply fallen flat. Heyman suggests that the keys to a turnaround are simple – longer-term planning and better promos. I’m not sure if that’s the case, but the perception that too many superstars are misused or buried on the roster and that segments often feel too scripted certainly exists.
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