Will WWE sell? Maybe

I’ve often been dismissive of suggestions that Vince McMahon would ever part with controlling interest of his company. Sure, he cares about making money, I’ve argued, but wrestling’s most infamous micromanager would never part with control.

Plus, succumbing to merger or acquisition would end the lineage of a family-owned business that traces back to his grandfather. Given Vince’s fascination with talent who are the descendants of his former stars, passing the business to the next of kin seems like something that’s broadly part of his philosophy.

But the last signal that the Logan Roy of pro wrestling will hand the business on to the next generation of McMahons seemed to fade when Stephanie McMahon curiously announced her leave of absence on May 19, saying she would return after “taking this time to focus on my family.”

The notion that Vince pushed Stephanie to take a leave of absence, reported by Business Insider, has been has been disputed by Fightful.

Around the time of Stephanie’s announcement, Vince removed Claudine Lilien, Head of Global Sales and Partnerships, we’ve confirmed, who worked under Stephanie, related to frustration with the performance of WWE’s advertising and sponsorship sales. Improving those sales is a growth opportunity analysts have repeatedly cited.

WWE announced yesterday the hiring of Catherine Newman, formerly CMO for Manchester United, as new EVP and Head of Marketing. She’ll take over many of Stephanie McMahon’s duties while she’s absent.

Whatever the full story is behind Stephanie’s absence, with her away at least temporarily, I’m less confident than ever WWE will be led in the future by a McMahon other than Vince.

Vince’s oldest child, Shane McMahon, once the presumptive heir, left his executive role in late 2009. Despite returning as a performer, he hasn’t held a corporate role since.

“It stopped being a collaboration and it stopped being fun,” he said years later in an interview about his exit from the company.

“I wasn’t going to allow a deteriorating business relationship affect our personal lives, and that’s exactly what was happening.”

Stephanie and her husband Paul Levesque seemed to be filling the vacuum left by Shane through the mid-2010s.

Levesque was the leader behind the emerging NXT brand. His role was reduced around the time he had serious health problems last year, but also after it was clear NXT was succeeding neither at becoming a lucrative media rights brand nor at beating AEW in head-to-head Wednesday night TV ratings.

Vince alluded to difficulties working with family members in a rare interview with WWE on-air commentator Pat McAfee in March.

“Hopefully if you’ve built something, hopefully you want it to continue on and prosper and grow, whether that’s with a family member or without a family member, because my view is the business is best for everybody, whether you’re a part of it or not a part of it, and you have to treat it as such,” Vince said.

“You have to be objective and look at family members or whoever it is just like you would other employees. And quite frankly I’ve probably expected more out of my family members, which is probably not the right thing either… But you have to do the right thing for the business, so if this person is not working out, they shouldn’t be a part of the company.”

Meanwhile Vince has re-elevated past aides, Bruce Prichard (who Stephanie fired in 2008) in Creative and John Laurinaitis in Talent Relations. Long-time political rival to Stephanie and Paul, Kevin Dunn, seems as secure as ever. His Television department was merged with the former Advanced Media Group last year, with Dunn winning out over EVP Jayar Donlan, despite Donlan getting recognition like being included in Sports Business Journal’s Forty Under 40.

With a McMahon family successor unclear, not only is it believable WWE could sell, it’s at least as plausible there’s a willing buyer.

Sports rights fees in the U.S. continue to grow across the space, including for WWE’s Raw and Smackdown programs. I’ve put the base expectation for renewal at 1.5x over the current average annual value of about $470 million for the two programs combined. Current terms expire in September 2024. Add another $200 million annually for the value of the deal that puts WWE’s tentpole events and video library on Peacock, which expires in March 2026, and the total value per year for much of the company’s content comes to $670 million — currently. Assume all those rights are due for a 1.5x raise and the cost to distributors comes to almost exactly $1 billion per year.

Profitable cable businesses of companies like Comcast will likely continue to erode, contrasted by uncertainty over whether streaming can fully replace those profits.

Now is the time for media companies to consider acquiring their sports content providers — while they can still afford it and before those fees multiply further, and with that, the value of the related companies. For now, WWE’s market capitalization is about $5 billion, maybe still small enough to be acquired by a major media company like Comcast.

Comcast subsidiary NBCUniversal already holds domestic rights to a bulk of WWE content: weekly flagship show Raw, monthly peak events formerly sold on pay-per-view, developmental program NXT, and unscripted series Miz & Mrs. Universal Studios could benefit from what WWE won’t hesitate to remind you is their wholly-owned intellectual property, as WWE president Nick Khan pointed out a few months ago. Smackdown, currently broadcast on Fox, could certainly find a well-suited home somewhere in the NBCU family, if not return to the USA Network, where Smackdown was televised until 2019.

Given NBCU’s deep investment in WWE content currently and relative lack of intellectual property, Comcast seems like the likeliest candidate to acquire the wrestling company.

Khan, who would likely lead negotiations of any deal to sell WWE, has been non-committal on the subject publicly, but clearly recognizes how WWE’s assets could be a fit for NBCUniversal.

“As we say, we’re open for business,” Khan said in an interview on The Town podcast in March.

“So if you look at, what does NBCU/Comcast lack that they need? And I think it’s a factual statement: they don’t have the intellectual property that some other companies have. They certainly don’t have the Disney treasure trove of IP, nor should they.”

But Comcast has a Chairman, CEO, and preferred class shareholder of its own, Brian Roberts, who would have to approve of any deal to acquire WWE. Analyst Brandon Ross mentioned in a recent episode of the LightShed podcast his team’s belief that Roberts was initially hesitant to commit to putting WWE content on Peacock.

Since WWE Network content debut on the streaming service in March 2021, though, the deal seems to have worked out well for both sides. WWE is among the most popular content on Peaock and the former pay-per-views have never been more highly-viewed, coinciding with the stabilization of a number of consumer metrics for WWE that previously were in consistent decline.

Maybe Roberts has warmed up to the WWE brand, but it’s unclear how willing Comcast would be to acquire a pro wrestling company and the hazards that come with it. Does a major media company want to oversee an entity with WWE’s track record of scandal and perhaps future issues like worker misclassification? Vince would likely insist on Dana White-like continued autonomy over WWE as part of any sale. What would it be like overseeing the CEO, who hasn’t answered to anyone in decades beyond passive shareholders and fans whose discontents have largely been dismissed?

Would parent company executives who inherit WWE understand this peculiar industry well enough to install effective leadership when Vince is no longer around? Turner Broadcasting and its successor Time Warner struggled to do so for WCW in the 1990s and that wrestling company failed. But those were different companies at a different time with different executives. Would WWE succeed under a parent company in the 2020s? Maybe.

Disclosure/disclaimer: I do not currently nor have I previously held positions in WWE stock (NYSE: WWE). I have no plans to initiate any such positions. I do not hold positions in any other companies mentioned in this article. This article expresses solely my personal opinions. The opinion expressed here is not and should not be construed as financial advice.