Live Coverage: WWE Q3 2020 Earnings Report

WWE’s Q3 earnings report is today after market close. It will cover the period Jul 1 to Sep 30.

In this thread I’ll be covering the information as it becomes available.

Conference call is at 5pm ET. Anyone can signup to listen at

Despite effects of Covid, I expect WWE to still record net income on par with its most profitable year ever.

First some background on WWE business as we know it this morning.

WWE’s market capital (the value of all shares combined) is currently just under $3 billion, down after huge waves of optimism in 2018 following the renewal of TV deals for Raw and Smackdown.

On January 30, CEO Vince McMahon fired his top two executives, co-presidents George Barrios and Michelle Wilson. Declines in the stock price and wider market uncertainty related to Covid followed.

Related press release:

As of August, Barrios and Wilson’s positions have been filled by new hires Kristina Salen in the CFO role (formerly of Etsy) and Nick Khan as president and chief revenue officer (formerly of CAA).

Khan was instrumental in helping WWE complete its 3.6x upgrade in US TV rights in 2018. The company likely hopes he can complete deals to sell the rights to PPVs to a major streaming player, rather than exclusively on the Network where they are primarily consumed today.

Last week I wrote a preview on what we might learn today. You can read it now, ad-free and paywall-free:

WWE Network average paid subs as we know them today are shown below. Q3 numbers will be updated this afternoon.

Subs are normally down in Q3 as it follows the Wrestlemania quarter. But there’s been a wider consumer embrace of streaming this year coinciding with the pandemic. Will this help WWE?

Last quarter online merchandise orders had a huge jump as fans were unable to buy merchandise at venues due to no live events. Will that continue into Q3?

The big question around WWE profitability this quarter centers around the Thunderdome. The introduction of the huge multimedia set coincided with the stabilization of plunging viewership for Raw and Smackdown. What production cost WWE though is uncertain.

Producing Raw and Smackdown at the company’s Performance Center throughout all of Q2 resulted in increased profitability. Q1 was even more profitable than WWE previously expected, partly due to lower expenses of running at the PC for the final weeks of Q1.

WWE also cut costs in April. Some of the non-compete compensation took until July to end. I don’t see this having a huge effect on the bottom line. Some may be overestimating the effect since talent releases are so visible to fan coverage.

The cost of the Thunderdome, per episode, is certainly higher at the PC. I could see the cost being as high as that of the pre-Covid traveling arena model.

Looking at the operating income line for WWE’s media division later today and comparing Q2 to Q3 may shed some light.

My predictions for the numbers WWE will report today:

WWE shares are climbing a bit late in the day

Q3 docs are dropping!

Key Performance Indicators (new look!):

Trending Schedules:

WWE reports net income for Q3 of $48.2 million. In only nine months, 2020 is already the most profitable year in WWE history.

Earnings per share of $0.57, exceeds even the highest analyst’s estimate.

Revenue for the quarter is $221.6, even with expectations.

WWE Network average paid subscribers are 1,604,000. That’s down only slightly from Q2, holding up better than many (including me) expected.

Online merchandise sales in the pandemic era continued performing well above last year’s trends, somewhat making up for the lack of any merchandise sales at venues.

More detail on WWE profitability: Net income now totals $118 million. As long as WWE doesn’t lose money in Q4 (no reason to think they will) this is the most profitable year ever.

Operating income for Q3 $63.4 million. WWE’s preferred profit metric, adjusted OIBDA was $84.3 million.

Profitability is almost completely driven by margins in the media division, where revenues for Raw and Smackdown rights are guaranteed and escalating.

It sounds like Q4 will be a lot less profitable as WWE incurs expenses related to the Thunderdome and employees returning from furlough.

The company refrains from reissuing guidance, citing Covid.

As WWE releases news it beat expectations, the stock price is continuing to climb in after-market trading.

New, darker-hued KPIs in the Salen era offer these comparisons of WWE Raw and Smackdown viewership trends, showing top 25 cable network viewing up 4% and broadcast viewing down 24%. In the below comparison, Smackdown was still on USA Network a year prior.

More from the updated KPIs: AVOD consumption (ad-supported video viewing on platforms like YouTube, Facebook, etc.) was up year-over-year, but not as high as the records set last quarter.

I believe WWE generates around $20 million in revenue annually from YouTube.

Media ad and sponsor revenue (which includes YouTube, on-air sponsorships, and WWE Network commercials) seems to be back to normal, reporting $18 million for Q3, after dipping in Q2, likely related to the wider economic effects of Covid.

Consumer product licensing was up to $10.8 million, higher than the previous two years’ Q3. This segment largely consists of game and toy products. The WWE Battlegrounds console game was released late in the quarter.

The conference call should start in a few minutes. Anyone can listen online here:

The investor presentation slides have been posted here:

The call has begun! SVP Michael Weitz’ introduction mentions that WWE executives Vince McMahon, Nick Khan, Kristina Salen, and Stephanie McMahon are on the call. I was not expecting Stephanie.

I will now quote executives and analysts on the call. These should be taken as paraphrases and not necessarily exact quotes.

Vince says, “I’ve never felt as confident as I currently do about our new management.”

He’s very optimistic about the outlook of the company.

Nick Khan begins after Vince. He runs through his professional background, his work with CAA. He notes was a lawyer before that. As a student he was an usher at Wrestlemania 9 in Las Vegas (his hometown).

Khan announces “in a groundbreaking deal we’ve sold a multi-part documentary to Netflix on the life of none other than Vince McMahon.”

Khan says “conversations have resumed for alternative strategic options” on selling rights to WWE Network content to major streaming players, but they’re unable to say when a deal will be completed.

Khan says WWE is working on a 2021 event that will primarily feature developing Indian superstars. It will be distributed through India media partner Sony as well as domestically in the U.S.

Khan introduces “Forbes #2 most influential market executive, Stephanie McMahon”.

Stephanie gives remarks on WWE’s perseverance through Covid. WWE gave fans “escape from their fear and uncertainty and delivered on our promise of delivering smiles to people’s faces.”

Stephanie puts over the Thunderdome and the Capital Wrestling Center, the latter, “a nod to my grandfather”. She highlights WWE online media performance.

This is the first time Stephanie has played such a major role in the opening remarks in an earnings conference call.

Stephanie went over many highlights I’ll need to catch up on later and turns over the call to new CFO Kristina Salen.

Salen summarizes a number of financial highlights.

I should note Thunderdome expenses do not appear to be enormous or nearly that of sports venues as I modeled.

On Raw and Smackdown viewership, she notes they improved from July to September and did so through unprecedented sports competition.

Salen says WWE can’t say when ticket live events will return, but “our intention is to return as quickly and as safely as possible.”

She reviews WWE’s large cash reserves, much of which was secured following Covid.

Salen WWE anticipates adjusted OIBDA of Q4 2020 will be below that of Q3 2020. Q4 2020 will have lower revenues than Q4 2019, in part due to the lack of a KSA event as in Q4 2019.

WWE did not buyback any stock in Q3 under its repurchase program but may do so in the future.

Q&A with analysts begins.

Guggenheim: On the ratings. They remain under pressure for Raw and Smackdown. Can you give us any plans to improve ratings, lay out strategy? If they remain at or below current levels does it impact rights negotiations?

Vince: Ratings are one of our many measurements… We have far more fans now than we have ever had. When you look at TV ratings, it is what it is… Our total audience is much bigger. You can’t just hang your hat on, ‘okay ratings are down’… We’re never off the air.

Nick Khan says: linear TV has lost eyeballs. Viewership has not. Consumption of content across many parties is up significantly. Consumption for us is up significantly. We’re confident our rights are going to continue to go up… Our ratings exceeded the NHL Stanley Cup.

Khan: We’re confident with where the product’s going and we’re confident the market understands that.

Q: Any update on the MENA TV deal?

Vince: We’re still in contact with them on that. We’re still negotiating. And I sure as heck don’t want to put a timeline on what it’s going to happen. It will happen one day. I don’t know when that is.

Q: Can you expand on potential sale on Network rights?

Khan: Everything outside of a sale of the Network is what we’re looking at. There are a number of streamers domestic and abroad… We’re in constant dialogue domestically and globally about licensing the Network to them.

Q: Is data something you plan to preserve in a strategic partnership?

Khan: Yes. Very important.

By the way, the 10-Q (long quarterly report) is already out:

Q: A lot of profitability is reliant on the greater TV ecosystem. What do you think is going on with ratings, not just WWE, but sports broadly?

Khan: If you look at the traditional (media) conglomerates… Many of these structures are realizing it’s about content first, where we put it is second…We all see where it seems to be going. Lets see if it gets there. If it’s a streaming first world, we’re prepared for it.

Q: Where do you think the FAANGs (Facebook, Apple, Amazon, Netflix, Google) are interested in the kind of rights you have?

Khan thinks the hires those companies have made indicate they’re interested in live content. “Our anticipation is that the FAANGs, if not all, the majority will be there in terms of live [content].”

Q: Is there any assumption on Saudi events for next year?

Salen: We’re very diligently working on 2021 operating and financial plans. It’s our full intention to speak about outlook when we speak next [Q4 call in February].

Q: When Amway deal ends, would you go back to PC, other venue?

Salen: Our assumption is we’ll be at a venue like the Amway Center for the rest of 2020.

She notes there are many places to go, given the state of the world.

Q: It looks like NXT (viewership) has held up pretty well. Can you update on when USA Network agreement for NXT expires? Any thoughts about monetizing NXT long-term?

Khan: #1 congratulations to Paul [Levesque] and the entire team. Last night’s ratings were particularly strong.

Khan says Network subs have held up well without NXT there. We typically don’t talk about the length of the deal without our partners being onboard to discuss it. We feel we have a long runway.

Q: Any learnings on what’s working with NXT that isn’t working for Raw and Smackdown?

Khan says it seems to be working with a cluttered fall schedule. We want the best writing, the best content.

Q: I remember when Trump mentioned leaning on you for leadership early on in Covid… What are you trying to see before you say ‘we’re going to go for it’ [return of live events]?

Vince says it was a conference call with Roger Goodell and others. “What is the turning point? I don’t know. I really don’t. Obviously when Covid lets up and it’s safe for our fans and performers. That’s just all I can tell you in terms of when.”

SVP Michael Weitz cuts in and says they’re going to end the call. The call ends more abruptly than usual.

Thanks for following along! I’ll be recording a @wrestlenomics Radio podcast soon.

Tweet me your questions. I may answer on the podcast.

Also look for my guest podcast appearances talking about the Q3 results.

Originally tweeted by Brandon Thurston (@BrandonThurston) on October 29, 2020.

Brandon Thurston has written about wrestling business since 2015. He’s also worked as an independent wrestler and trainer.

This article is available ad-free for everyone because of support from our subscribers.


What to watch for from WWE’s Q3 2020 earnings report

WWE will report Q3 earnings on Thursday, October 29 after trading closes. Information will be published that evening on for the period from July 1 to September 30. A conference call with statements from WWE executives and questions from stock analysts will happen at 5pm ET. Anyone can listen in live.

Cost of the Thunderdome

The biggest unknown factor making it hard to anticipate WWE’s Q3 finances is that we don’t have a sense of what the company is paying to produce Raw and Smackdown with the Thunderdome set.

The enormous set of lights and numerous remote live streams of fans watching the matches has been received as an improvement over the atmosphere at the Performance Center, where there were either no spectators or new recruits playing along as if they were fans.

On earnings calls, WWE CEO Vince McMahon repeatedly cited the lack of a live audience as a factor in declining viewership, and the Thunderdome seems to be the response.

Raw and Smackdown were produced at a relatively low cost at the Performance Center for the entirety of Q2. This resulted in a more profitable quarter than most analysts expected. The Thunderdome debuted on August 21 and has been the presentation for every Raw, Smackdown, and pay-per-view taping since.

A similar presentation, branded the “Capital Wrestling Center” was unveiled for NXT at the Performance Center — but on October 4, just after Q3 ended, so won’t be a factor in this report.

The Thunderdome is provided through WWE’s partnerships with The Famous Group. They also work with Quince Imaging and Frozen Mountain to create the set.

Thunderdome era production costs per program must be higher than they were in the Performance Center (March 13 to August 17), but by how much? Relative to pre-Covid costs when WWE was touring, is the cost higher, lower, or about the same? I think each Smackdown and Raw taping cost WWE about $1 million to produce, with pay-per-view events running higher.

In my earlier estimate, I modeled the cost of production during the Thunderdome to be roughly equal to the pre-Covid touring Raw and Smackdown costs.

That would still result in a profitable Q3 for WWE, but this results in an estimate lower than what any stock analyst is estimated. I was relieved to find there is now one analyst who’s modeled an EPS nearly as low. However due to my lack of access to the Bloomberg Terminal, I don’t know who my prognostic neighbor is.

My EPS estimate implies a net income for Q3 of about $13 million on quarterly revenues of $222 million. (The full estimate is here.)

What will Kristina Salen bring to WWE?

Kristina Salen will debut on the call as WWE’s new permanent chief financial officer. She replaces interim CFO Frank Riddick and, before him, former long-time CFO and co-president George Barrios.

What role will the new CFO play in the company? Will investors get an impression of her vision for the company? Will she be the key public figure for investors, as Barrios was, or will that role be more dominated by new president and chief revenue officer Nick Khan?

Will the former Etsy CFO change the company’s reporting methods, resulting in changes in how we get information on WWE’s corporate website and in its SEC filings? The company’s finances are generally broken down into three major divisions: media, live events, and consumer products. Eleven revenue segments are revealed across those three divisions. This has not always been the case and may change under new management.

Further, will the company’s “Key Performance Indicators” slides change? Are there metrics the Barrios regime focused on that Salen will not, and vice versa? Does it make sense to focus on viewership trends for Raw and Smackdown, or are there other metrics that more full tell the story? (I think there are.) Will Salen continue to focus on the Barrios-favored non-GAAP profit measure, adjusted OIBDA? In the past WWE focused on OIBDA (the non-adjusted variety) and something called “profit contribution”.

These questions may not be answered with the Q3 report, but gradually over time.

WWE Network subscribers

End-period paid subs for the WWE Network were up in Q2 after being down year-over-year throughout 2019 and into Q1 2020. Average paid subscribers (the key metric for calculating revenue related to the service) however was down slightly for Q2 from the prior year.

Did paid subscribers grow in Q3? Streaming services across the board seem to be growing in strength. After stalling in 2019, probably related to popularity of the product overall, is broader consumer behavior encouraging a rebound for WWE in this area?

Vince McMahon’s comments on TV ratings

Vince McMahon was grilled by analysts on Raw and Smackdown ratings in the Q&A portion of the Q2 call. It was pointed out to him that NXT and AEW bounced back after a lull following Covid, but Raw and Smackdown had not.

The key internal weakness that chronically affects ratings and broad trends in other metrics is, and will for the foreseeable future will be, creative. In particular, Vince in his role as CEO also functions as the head of creative. He’s held the role for decades, for far too long. WWE’s ability to create stars and storylines audiences care about will always be unduly hindered while Vince controls this role for Raw and Smackdown.

That said, this should be an easier Q&A session for Vince this time.

The Thunderdome will be touted as a success. It was a positive factor; but so was the return (he’d been out since March) and long-awaited heel turn of Roman Reigns, which supported interest in Smackdown. Smackdown was the most-viewed or tied (Showbuzzdaily reports P18-49 ratings for network with the traditional one decimal place) for most-viewed in the key demo on network primetime on every single Friday night in Q3.

Raw too held up better than one might expect against Monday Night Football. The show is doing better so far during NFL season than it did in July.

I think an additional psychological factor is at work. WWE audiences have settled into the mindset during Q3 that the pandemic era is more permanent than temporary. Temporary breaks audiences may have been taking from WWE programming, waiting for events to get back to normal, have been lifted, as life with Covid has proved to be unending.

Meanwhile, there’s been anxiety throughout the sports world about the decline in sports TV viewership, and its by no means apparent there will be any stop the growing value of sports broadcast rights.

In light of wider sports viewership suffering and a mild upswing in WWE’s ratings, some of the pressure will be off. Competition from AEW is still present, but Raw and Smackdown continue to be among the most highly-viewed weekly programs on cable within the key demo. And that’s not changing any time soon.

Is the WWE NXT agreement with NBCUniversal (USA Network) expiring next year?

When the deal was made to take NXT off the WWE Network and put it on USA, Guggenheim said they believed the deal was for “one or two years”.

A one-year deal would’ve expired a few weeks ago. Is the deal for two years? Is it going to be renegotiated soon? Is it being renegotiated now? Is it attached to the five-year agreement for Raw somehow?

WWE said at the outset of the move that the strategy was to build on TV rights value for NXT so it could be monetized in the way Raw and Smackdown are. Does WWE feel they’ve accomplished this in the last year and are looking for a sizeable upgrade in fees, relative to its delivery of P18-49 viewership?

Are online merchandise sales continuing to make-up for loss of venue merchandise business?

Venue merchandise sales, like live event ticket sales, are rendered to $0 due to the pandemic.

However eCommerce sales were up strongly in Q2, seeming to compensate for fans’ inability to purchase merchandise at venues.

eCommerce compensating at the rate it did in Q2 for merchandise sales overall (92%) would result in sales of $9.3 million in Q3.

What the latest outlook on a second Saudi Arabia event in 2020?

Each Saudi event delivers about $50 million in revenue for WWE. It’s seems doubtful now there will be a second event there this year, given unrelenting Covid deaths in the U.S. and Saudi Arabia.

Vince said in the Q2 call that if there isn’t one this year, any missed events would be tacked on the end of the current ten-year deal with the government, which runs through 2027.

No second Saudi event in 2020 is probably baked into the current stock price. This is probably the last time investors will hear from WWE’s top executives until 2021. Will they affirm there will be no second event?

Is Nick Khan closer to getting WWE a PPV rights deal?

With Nick Khan in place as chief revenue officer, the agent who WWE tapped to complete its 2018 Raw and Smackdown rights deals, is he working on selling rights to pay-per-view events away from the WWE Network and onto a major streaming player?

Vince previously speculated such a deal would be completed in Q1 2020, before Covid struck.

What’s the outlook now on such a deal? Is making this move still within WWE’s strategy to further monetize its content? Is there any clarity yet on what content WWE is trying to sell? The pay-per-views only, or additional Network content? Or the Network altogether?

Should investors give up hope on a MENA TV deal?

I don’t recall any discussion about this on the Q2 call in July. Is WWE still negotiating with Saudi government-owned Middle East Broadcasting Center (MBC) for rights fees for core content in the Middle East North Africa region?

The Saudi government also reportedly supports a pirate broadcaster, beoutQ. According to the complaint in an ongoing class-action shareholder lawsuit against WWE, beoutQ is illegally broadcasting WWE content in the Middle East North Africa region, discouraging MBC’s incentive to complete a deal with WWE.

I believe WWE’s previous deal in the region with OSN was worth $10 million to $15 million annually. OSN dropped WWE in 2019 when it decided to cut all sports programming. Conspicuously, OSN cited piracy as a reason.

Brandon Thurston has written about wrestling business since 2015. He’s also worked as an independent wrestler and trainer.

This article is available ad-free for everyone because of support from our subscribers.


The mystery of WWE NXT’s rights fees on USA Network

I don’t believe there’s any reliable public report on the average annual value (AAV) for WWE NXT on the USA Network.

There are specific credible reports on the AAV of WWE Raw ($265 million), WWE Smackdown ($205 million), and AEW Dynamite ($43.5 million).

But for NXT, reports and estimates are all over the place:

I believe the MKM and JPMorgan numbers are estimates modeled by stock analysts, and not based on human sourcing. Those firms’ estimates might be based on revenue per viewer hour rates of Raw and Smackdown, and consider estimates of what NXT might deliver, based on the 2017 one-off 7pm airing on USA.

I don’t endorse these results, but you can see here how such estimates might’ve played out, allowing analysts to surmise NXT was getting as much as $50 million or $70 million AAV:

P18-49 viewership numbers are estimates based on actual P18-49 rating (from Showbuzzdaily) multiplied by 1295.

I believe the Observer report is based on human sourcing, but it’s not clear whether the information was from someone with direct knowledge.

However, the Observer’s valuation ($30 million to $50 million) does overlap with the Guggenheim estimate (about $30 million), which is also apparently based on a human source.

Guggenheim analyst Curry Baker wrote in a related stock analysis: “After speaking with [WWE], we believe that the NXT deal struck with USA is for one or two years at ~$30 million a year.”

If WWE was getting a great deal — of say, $50 million annually or more — from USA for NXT, one would think that fact would be celebrated in the following earnings report. But there was no such bragging in the Q3 2019 report.

To make things more opaque, the timing of WWE’s new deals for Raw and Smackdown makes it impossible to make a meaningful estimate based on the company’s revenue reporting. The increase in rights fees for the flagship shows went into effect in the same first full quarter that NXT appeared on USA Network (Q4 2019), so it’s not clear what a “normal” quarter would look like without NXT money for the “core content rights fees” line, within which all domestic and international rights fees for the three programs are reported.

However, it’s not clear the NXT deal is so valuable that it’s actually a profit contributor.

WWE co-president George Barrios (before his termination) was asked on the earnings call on October 31, 2019 if NXT (which debuted on USA the month prior) was now an EBITDA contributor. He declined to answer and deflected to emphasizing the long-term opportunity of monetizing NXT.

From WWE’s earnings call, 10/31/2019:
Ben Swinburne — Morgan Stanley — Analyst
Okay. And I don’t know if you’ll answer this but is NXT a material — a contributor to EBITDA? Or a material contributor to EBITDA? A material impact to EBITDA, in the fourth quarter, either good or bad?
George A. Barrios — Co-President and Director
Yeah, we haven’t talked about the economics of NXT. I think if you remember the release when we announced it, we said that we were doing this for the long term.

The relevant statement in the August 20, 2019 press release Barrios referenced is a quote attributed to Chairman and CEO Vince McMahon.

“The move to USA Network provides an opportunity to deepen our relationship with NBCUniversal and further build the NXT brand,” said Vince McMahon, WWE Chairman & CEO. “Over the long term our goal is to develop a following that can be monetized to the same level as our flagship programs, Raw and SmackDown.”

Again, one would think if the NXT deal were on the upper end of some analysts’ estimates, the company would be showing more pride when asked and wouldn’t so emphasize the long-term opportunity.

It’s possible NXT could be getting as much as $30 million a year while not being a profit contributor, depending on the cost of production. I believe the pre-Covid cost to produce one live Raw or Smackdown was about $1 million. It seems reasonable to imagine a pre-Covid live NXT with its smaller set and regular venue at Full Sail University would cost substantially less. If the weekly cost of a live NXT was as much as $600,000, the annual cost comes to just over $30 million. If so, that would explain Barrios’ unwillingness to affirm NXT’s contribution to EBITDA. Still, I lean toward thinking the notion of $600,000 in weekly production costs for NXT is higher than the reality.

To consider the value of the NXT deal, let’s think too about what motivated the decision to move NXT from being a one-hour program (usually taped in advance in four-episode sessions) exclusive to the WWE Network to being a two-hour program airing live each week on USA.

I believe there was an urgent desire from WWE and NBCUniversal to protect the value of Raw by directly competing with AEW head-to-head on Wednesday. Despite public comments from EVP Paul Levesque that he’s not that concerned with the competition, I believe that’s the largest motivating factor behind the move. That compulsion to go head-to-head with the strongest wrestling competition in 20 years is probably a greater motivator than any short-term monetary compensation.

Indeed, competing with AEW is apparently an issue NBCUniversal is interested in as well. When AEW was preempted from its normal timeslot in September, replays of the most recent NXT episode were suddenly scheduled on Syfy (another NBCU channel), ensuring Dynamite was still opposed head-to-head by NXT in some form.

Why would NBCU care so much?

Raw is USA Network’s most-viewed show. It delivers weekly live first-run three-hour episodes 52 weeks a year. Depending on how you define it, Raw is arguably the most-watched weekly show in the key P18-49 demographic that’s airing year-round anywhere on cable. Really only NBA, NFL, and college football do better consistently, and none of those air year-round.

Raw is a strong enough show that it’s probably associated with specific guarantees called “covenants” within the agreements for transmission fees between NBCUniversal and cable/satellite providers. In other words, Raw is specifically justifying a portion of USA Network’s largest source of revenue, transmission fees. If Raw were to suddenly stop airing on USA, cable providers could go back to NBCU to renegotiate terms. If WWE has a strong wrestling competitor in the media ecosystem, it may make it harder for NBCU to sell those covenants to cable providers at a high price. In sum, the success of AEW may threaten a portion of USA Network’s revenue from transmission fees, and if Raw isn’t driving transmission fees as strongly, then that threatens NBCU’s willingness to contribute highly to WWE’s biggest revenue source, its TV rights fees.

Considering these motivating factors and the inconsistency of the various aforementioned reports and estimates, I don’t have confidence in any particular number on NXT’s compensation. Further, it does seem within the realm of possibility the number is well below $30 million.

That said, there is a long-term opportunity for NXT to be monetized at $50 million to $60 million per year, based on the current revenue per viewer hour compensation of Raw and Smackdown, and the increasing demand for live content on pay TV. NXT’s terms could be renegotiated sooner than later, since, if the agreement with USA was for two years, the deal will be expiring around September 2021.

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3 Metrics That Will Determine the Future of the U.S. Wrestling Business

Wrestling media focuses too much on linear viewership trends. It’s allowing us to see a mirage of consequence that isn’t really there.

I, too, am guilty of “analysis” announcing that the latest week’s Raw is the nth-lowest viewership ever. Or that some week of Smackdown is the lowest ever since the move to Fox. As if that’s the story most relevant to the economics of the wrestling and TV industries.

Sources: and estimates based on viewership from

Graphs like the one above read like doom for WWE. And such analysis is met with dismissive reminders that “all TV is down” or, alternatively, that WWE is about to go out of business; the latter usually companied by a Vince McMahon GIF.

Leading up to the 2018 TV rights negotiations, some commentators decried the latest episode of WWE’s poorly-received programming and the news of the nth-lowest rating ever, and remained skeptical networks would reward the company with an increase in rights fees. Yet NBCUniversal and Fox together agreed to give WWE a 3.6x increase that spring. We are going through a similar exercise as 2023 negotiations approach.

WWE’s reporting methods for television revenues have changed over the years.

With our Monday Night War educations, we’ve been focusing on linear macrotrends in viewership, which are decidedly down and to the right.

Wrestling media people may lack the lessons — but not the data — for assessing wrestling viewership in a context that’s more informative to the economics of the wrestling business.

So what’s the right way to analyze wrestling viewership? What factors truly indicate the value of future TV deals?

I’d hate to write something that’s basically a listicle but consider it a tribute to Wrestlenomics hero George A. Barrios, who in his many presentations as WWE co-president was fond of describing the company’s business as a number of “tiers” or “pillars”.

The future of the wrestling business will depend greatly on the outcome of future U.S. TV rights negotiations of WWE and AEW.

For WWE, those negotiations will likely happen around mid-2023.

For AEW, if WarnerMedia picks up the option to extend their deal through year-end 2024, negotiations for All Elite Wrestling U.S. rights will be happening around the same time as WWE, in mid-2023.

A period of three years is an eternity in the media business, but there are some key factors that we can watch to get a sense of how those negotiations will go — and none are an absolute measurement of viewership.

1. P18-49 Daily Rank

Not total viewership, not key demo viewership; the ranking of the key demo, compared to other programming. Viewership is interesting and important to advertisers, but we’re trying to anticipate the future of wrestling TV rights. What justifies huge TV rights fees for a program is that the given program is one of the most highly-viewed programs.

Former Fox Sports executive Patrick Crakes spoke to The Houston Chronicle recently about the NFL’s declining viewership and league’s future TV value.

“It’s all about what the NFL delivers compared to everyone else, and the gap in that regard has never been wider…”

“Even if the NFL declines by 10 percent, its value will remain to programmers and advertisers,” Crakes said. “The ratings are beside the point. The league still will be able to double its value in the next round of bargaining.”

So what are the trends like for this metric for various wrestling programs? reports the P18-49 ranking for the top 150 cable originals every day. It turns out these rankings for WWE are much more stable than its linear viewership trends. Raw has been ranking between #2 and #5 since at least 2014. Although the slip to #5 for Q3 this year bears closer watching. Smackdown has been ranking between #1 and #5. Dynamite and NXT have clearly improved in Q3 from where they were earlier in the year.

Average Daily P18-49 Rank, by Quarter
*WWE Smackdown moved from cable (USA Network) to broadcast (Fox) in Q4 2019. These numbers consider where Smackdown would have ranked on cable on Friday if it had continued being a cable show while having the same P18-49 viewership it had on Fox.
**Only 2 one-hour episodes of WWE NXT aired during this period.
Data source:

2. New TV deals for second-tier sports properties

What kinds of deals will WWE and AEW’s TV peers get between now and 2023? Big properties like NFL, NBA, MLB, college football, college basketball, and NHL will always be a priority over wrestling. How much money will be left over to bid on wrestling after, for example, billions are allocated for new NFL contracts, which might be completed later this year?

Some peers, like UFC (whose deal with ESPN is through 2025), have deals whose terms extend beyond when wrestling rights will be dealt.

But there are other deals that will be completed before wrestling comes due. Will other non-major sport properties — like NASCAR (the Fox deal expires in 2024), tennis (ESPN’s deal for Wimbledon ends after 2023), and various soccer rights — get an increase?

Are digital/streaming rights being sold on these properties too, as in the case of the NBA and NFL? Or are the secondary sports properties still too small to compromise on selling anything but exclusive broadcast rights on linear TV?

The speculation that the sports rights bubble is going to burst has so far been a myth. I tend to believe the demand for live sports will remain strong, indefinitely. The balance of dependency between partners like WWE and NBCUniversal has shifted greatly in recent years. Networks like USA have entered an era where they need their leading programs more than ever to sustain transmission fees and ad dollars. Consequently, for WWE, TV is no longer a low revenue funnel to drive sales for live events, PPVs, and merchandise; it’s the biggest revenue stream of all — even if the audience is a fraction of what it once was.

I think pay TV will increasingly become a medium that specializes in live content — mainly sports and news. And as the dependency on those types of programming increases, so will the economic value of the leading live content. Traditional cable/satellite subscriptions will cover a lower and lower percentage of households, for sure. But even if cable companies begin to face financial ruin, many major networks have pivoted to streaming and gone direct-to-consumer — fights with streaming devices notwithstanding. The potential migration of live sports rights from pay TV, exclusively, to digital — or some split of pay TV and digital — may only increase the number of bidders, the holy grail of course being if FAANG companies get involved.

3. The proportional delivery of the wrestling audience

Consider that, in the key demographic, Raw and Smackdown are delivering a combined 75% of the weekly viewership. But they are receiving a combined 87% of the rights fees. That’s if we take for granted NXT is getting as much as $30 million per year on USA.

WWE Raw gets $265 million AAV and Smackdown, $205 million (The Hollywood Reporter); AEW Dynamite gets $43.5 million (F4WOnline).

I struggle to see how this degree of imbalance is sustainable through a future round of TV deals. If so, this means a big increase for AEW and NXT, possibly at multiples over their current fees. It’s unclear what this means for Raw and Smackdown, which may have to come to terms before AEW since WWE flagship brands’ deals expire three months earlier (September 2024), in the scenario WarnerMedia options AEW through December 2024.

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