As AEW and Warner Bros. Discovery continue to negotiate — and maybe some day soon, finalize –a potential media rights deal, a report from Puck suggests the value of such an agreement is in the range of $170 million on an average annual basis over the course of four years, with the fourth year being at the option of WBD. And that value may or may not include any streaming rights and the package that AEW is reportedly shopping to broadcast networks.
AEW is a private company, so it’s hard to know for sure, but such a deal would probably bring AEW into annual profitability at some point early in the term, realizing what has likely been the long-term plan for the company since its launch in 2019.
We hosted LightShed analyst Brandon Ross on Pollock & Thurston on Wednesday, who expressed doubt that AEW’s media rights could be worth anywhere near the amount reported, citing WBD’s financial issues and need to replace departing NBA games with highly-viewed live sports as the media company renews its agreements with carriers.
“Knowing where [WBD is] with their debt load and their need to increase free cash flow, and at the exact same time get their affiliate deals done,” Ross said on Wednesday. “I don’t see that [WBD CEO David Zaslav is] going to be willing to pay a huge price for this particular asset, given where the viewership is at now and also given the point that while it’s engaging, it’s not actually sports and I think the MVPD distribution partners are looking for sports.”
Some AEW supporters were unhappy to hear doubts about the impending media rights deal. Completing a deal worth $170 million would finally put to rest provocations that AEW is an unprofitable business overly dependent on financial backing from the Khan family’s billions. Such a deal, long-awaited, would finally (but, really, probably won’t) shut up haters on the opposing side of a tribal industrial media complex.
If AEW’s new deal is worth around $170 million, why did NXT only get $25 million?
Regardless of what the terms of the deal end up being, it gives us an opportunity to do math and consider AEW’s media rights value based on its viewership and audience make-up, compared to what’s known about the same for WWE for the reported values of deals for Raw, Smackdown, and, in particular, NXT.
If NXT was only able to attract an average annual value of $25 million, as we reported last year, why would AEW — even with more content — attract a deal almost seven times greater in value? And if it’s because of certain differences between the NXT and AEW properties, how significant are those differences?
Originally the bulwark against Dynamite’s during its first two years, NXT retreated from Wednesdays to Tuesdays in April 2021. Rather than improving, its viewership declined without the head-to-head competition. After discarding an ill-conceived “2.0” rebrand, NXT has rebuilt its ratings, proportionally even better than Raw and Smackdown’s own improvements since the resignations of Vince McMahon.
Dynamite vs. NXT: Viewership
As NXT is about to move from the USA Network to CW, beginning in October, NXT’s ratings are nearly tied with AEW’s flagship show.
NXT ranks almost as strongly as Dynamite, too. In this quarter, NXT’s median daily rank in primetime among cable originals is #4, Dynamite’s is #3.
The table below extrapolates a value for AEW’s weekly TV programs based on the domestic rights deals made for NXT and Raw, with CW and Netflix, respectively, adjusting for hours of content and the viewership that those programs deliver.
Based on this rough analysis, NXT’s rate of compensation for its viewership and annual programming hours suggests AEW’s three weekly shows are worth an average annual value (AAV) of $47 million to $52 million.
To reach an AAV closer to the Puck report, we would need to apply Raw’s rate of payment, which estimates the three programs could be valued between $206 million and $208 million. However, this seems overly generous, as Raw’s average viewership is more than twice that of Dynamite and about four times higher than either Collision or Rampage.
Even applying NXT’s rate to the lower-viewed Collision and Rampage could be seen as too generous.
Still, $52 million is almost certainly less than what AEW currently receives from WBD for the rights to these three shows. Fees for Dynamite and Rampage alone were about $44 million annually, with Collision adding additional payments. Just covering the added costs of another touring TV taping would likely require fees totaling around $75 million per year. And with possible escalators in AEW’s current deal with WBD, I believe AEW is likely earning closer to $90 million in U.S. broadcast rights fees this year—a figure significantly higher than what we can infer from the NXT deal.
To believe that AEW’s rights are worth around $170 million, you have to assume some combination of a) NXT got a deal well-under market value, b) there are stark differences between AEW and NXT beyond the data analyzed in the table above, or perhaps there’s always, c) that there are more suitors bidding for AEW rights than NXT rights.
There’s little we can add here about a) or c) without inside knowledge of the negotiations for these properties. But we can look more closely into b).
What else AEW has besides 3 TV shows
For sure, AEW is offering more than just rights to three weekly TV shows. AEW is potentially selling rights to its pay-per-view content, which conventional wisdom says could end up on Max. AEW is potentially selling archival library rights which are currently not monetized, including next-day rights. Again, Max is possible home for those rights.
Still, we’re talking about a difference of more than 3x between $52 million and $170 million or more, which incremental content alone may not explain.
NXT is primarily taped in the Performance Center, essentially a studio. AEW is taped on the road in various arenas, albeit with diminishing attendance that production takes care to shoot around and make the most of. I struggle, though, to come up with an argument for why being in arenas as opposed to a studio allows a network to get a better return on investment. And this story gets more complicated if we start thinking about Collision’s residence in a studio-like setting in Arlington for several weeks this past summer and whether such residences will become more common.
You could point to the fact that AEW pay-per-views are currently sold digitally on Bleacher Report, which WBD owns. So AEW and WBD are splitting some minority percentage of PPV sales with WBD. Access to PLEs as well as NXT’s archives are part of Peacock’s monthly subscription, and there’s no PPV sales to split.
Dynamite vs. NXT: Audience Composition
AEW’s most devoted partisans often point out that AEW’s audience is higher income and younger than NXT and other WWE programs, making AEW shows more valuable to advertisers. But according to new data we’ve reviewed for the current quarter, that’s less true than before.
The median household income for AEW’s Dynamite remains higher at $74,000 compared to NXT’s $66,000. However, over the past year, the median household income for all three WWE programs has increased, while the median household income for all three AEW shows has declined. Notably, the income gap between viewers of Raw ($73,000) and Dynamite has narrowed significantly, with Rampage essentially matching Raw’s figure. In contrast, Collision viewers show a tendency toward lower incomes, averaging around $58,000. Smackdown, with most episodes this quarter on Fox, had a median household income of $69,000.
Before you get too proud about how much money the viewers of your preferred wrestling show earn, note that all these income levels remain below the U.S. median, which was $80,610 in 2023, according to the Census Bureau. This trend may diminish the advertising value for wrestling compared to other programming, consistent with wrestling’s still-unbreakable reputation.
And as to AEW’s audience being younger, the latest data shows that difference has diminished, too. It’s true NXT’s audience is still older, with a median age of about 53 this quarter, but far from the 57 or so at the height of 2.0 era in 2021 and 2022. Meanwhile Dynamite’s audience has gotten older, about 51-years-old. Dynamite, Collision, and yes, Raw, are now all essentially tied with a median viewer of about 51.
WWE’s TV audience has not only grown in number since the removal of Vince McMahon from creative; it’s also become both younger and more affluent (if still not that affluent).
Thinking it through I’m left with a weakened argument that AEW content has these stark differences from NXT or broader WWE.
Again, it’s always possible NXT got a bad deal for whatever reason. Maybe there weren’t strong bids. Maybe the scandals associated with McMahon were no help, as he had forced his way back into the company by the time each of WWE’s new TV deals were made. Or maybe WWE just valued being on broadcast as Smackdown was moving from broadcast to cable, while Raw is moving from cable to streaming on Netflix. WWE executives have remarked about the value of having content available across these different forms of television media.