NXT Hasn’t Become A Third Media Rights Brand For WWE

On the latest edition of Wrestlenomics Radio, Brandon Thurston and Chris Gullo went into detail on the recent WWE NXT cuts made on Friday. It was reported by Dave Meltzer on Wrestling Observer Radio that these cuts were led by Vince McMahon, with support from Bruce Prichard and John Laurinaitis. The moves are an effort to revert NXT back into a developmental brand.

In 2014, Paul Levesque (Triple H) led NXT to become a prominent third brand away from the earlier reality series origins of the show. Thurston went into detail on this week’s Wrestlenomics Radio on NXT’s new deal with USA Network.

“Let’s talk about what’s causing this. Every wrestling fan wants to talk about AEW vs. WWE and the fact that AEW beat NXT consistently in the ratings, in the Wednesday Night War, almost every time in terms of key demo viewership [viewers aged 18-49] and most of the time in terms of total viewership in the 70 some odd weeks that those programs ran head to head from late 2019 to April 2021,” Thurston said. “I think that’s probably part of the story and part of the perception in Vince McMahon’s mind, and by the way [WWE’s repeated public message is that], ‘they’re only focused on themselves,’ but I don’t believe that.

“I believe WWE cares about what AEW is doing, to a significant extent. There’s that, but I think what’s as big a piece is what happened earlier this year in March, where we got this press release. NXT had a two-year deal that started in fall 2019 to be on the USA Network. USA Network’s parent obviously is NBC Universal, and that deal is coming to an end this fall in two months.

“They renewed, WWE announced on March 30 that they’ve signed a multi-year extension. Now, we don’t know how long it is, but it’s multi-year, so at least two years, and this is when they also announced that WWE would move from Wednesday to Tuesday, and that began on April 13.”

Thurston continued as he discussed NXT’s move from the WWE Network to the USA Network. He examined WWE’s efforts to make NXT into a third rights brand and compares NXT’s financials to that of Raw, SmackDown and AEW.

“We never got an idea of what WWE really got in terms of TV rights fees from NBCU for NXT,” Thurston noted. “Of course, NXT was on the WWE Network. It was essentially the flagship show for the WWE Network for the first several years in the pre-Peacock era, and they decided to move it away from being essentially an exclusive Network show.

“Yes, it was on Hulu too but moving away from the Network to be on the USA Network. There was some worry from stock analysts, media analysts and investor types. ‘Why are you taking content that’s exclusive or almost exclusive to the Network and putting it on television when you’re trying to grow Network subs.’ And I think the media analysts who aren’t inundated in the wrestling industry every day probably didn’t appreciate the extent to which WWE wanted to compete head-to-head with AEW and sort of stamp out AEW’s progress before it got too far, but the public message, and I think there’s some legitimacy to this, was that maybe NXT could grow into this third media rights brand, in addition to Raw and SmackDown.

“Raw is getting $265 million a year from NBCU, that’s just in the U.S. SmackDown is getting $205 million from Fox. WWE in 2020 made over $500 million, more than half of its revenue from Raw and SmackDown rights fees. To an extent, NXT is bundled in there too, but if you took NXT out, it would be a minimal difference. So did NXT turn into this media rights brand? When the move was announced in 2019, there was speculation from stock analysts who cover WWE that the NXT deal to go to USA was worth maybe $50 million a year, early estimates were $100 million a year.

“We don’t know how much it was really worth, and we don’t know if it’s even all guaranteed or if it’s to a great degree, an ad revenue share, but my current belief is that it’s worth well less than what AEW getting from Turner, which is $44 million a year on an average annual basis. I believe it’s something probably closer in the neighborhood to $20 million a year. That’s what I believe about the first term, which is a two-year term.”

Thurston discussed WWE’s attitude towards NXT’s deal with USA Network. He explained what it meant to WWE, based on WWE’s public statements about it and the market’s reaction to it.

“Again, that first term is coming to an end this September, and the new deal will go into effect,” Thurston said. “They announced the new deal this past March, and was it an upgrade? Well, the stock price didn’t move when this deal was announced. The market didn’t feel like it was a big deal, and if this is a $50 million deal or $100 million deal on an average annual basis, that would be a big deal. That would be along the lines of WWE’s second biggest global TV deal, which is India, $50 million a year they get from Sony in India.

“If WWE is really getting $50 million, or something in that neighborhood, for NXT on USA Network, I would think the stock market would respond, but the stock market didn’t respond in March when this deal was announced or in early April when the stock market had the opportunity to react. And then we had the Q1 call on April 22. Stephen Cahall from Wells Fargo asked Kristina Salen about it.

“Basically, what I read this to be saying is that whatever the NXT deal was worth, the new deal was not a surprise to them. Or the value is too small to even really affect their financial guidance. The NXT deal, number one, was not a surprise to them.

“If it was a really great deal, they wouldn’t report a number on these earnings calls or in the press release, but they could have at least, if it was a great number, celebrated it in some way or given some indication about how happy they were about it. I know she’s happy saying, ‘We’re really pleased with that result,’ but it wasn’t a highlight in the press release.

“It only came up because an analyst asked about it, naturally, because NXT rights are something that has been hyped in the past. They justified putting it on the USA Network with the idea that they would be able to grow this third brand as a major media rights producer. We didn’t get any sort of hype. It’s not leaked to the Hollywood Reporter or to Sports Business Journal, that this is a big deal. If this was a big deal, something like that might happen, but it didn’t.”

Thurston then discussed what this all means for NXT now. He talked about NXT’s business performance over these past two years.

“Yes, NXT did not win the Wednesday Night War. AEW did, and NXT did not transform itself into just being some hybrid version of developmental and good content for the WWE Network into being, whatever value that has, this real tangible value of producing dozens of millions of dollars in media rights every year,” Thurston explained. “That’s not happening.

“NXT did not turn into this third media rights brand, yet it’s still on the USA Network. It’s probably producing some money. I would guess somewhere around $20 million a year. It doesn’t sound like it got a major upgrade and I think that’s sort of the financial, tangible, quantifiable, if you want to call it, failure. NXT didn’t meet those expectations.”

Jason Ounpraseuth has covered pro wrestling since 2019. He co-hosts the Gentlemen’s Wrestling Podcast.

Brandon Thurston has written about wrestling business since 2015. He’s also an independent pro wrestler and trainer. For more, see our About page.

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