After much anticipation the deal is finally finalized.
With three months left on its current deal with Warner Bros. Discovery, AEW and its media partner announced on Wednesday a new agreement that renews most of AEW’s existing rights and effectively buys rights that have not been licensed in the U.S. before.
Based on the timing of other media rights renewals, including WWE’s, I initially expected AEW’s deal to close in mid-2023, about 18 months before the current deal’s expiration. Consistent with that but incorrect, somehow wrestling media interpreted that a deal would be announced at WBD’s upfront presentation for advertisers in May 2023. That event, however, only confirmed the launch of Collision, and while it came with some additional revenue, the rumored $200 million per year deal didn’t materialize. So the discourse and agony and agonizing discourse continued for an additional fifteen months.
Despite the length of the negotiation, the new deal is a major step in AEW’s history. The startup has probably been unprofitable each year since its launch in 2019, betting on this kind of media deal to become financially sustainable.
However not every question has been answered by yesterday’s announcement or the various media reports on the deal.
What we now know
Dynamite and Collision have been renewed and will simulcast on Max as well as, respectively, TBS and TNT, beginning in January.
AEW’s library is coming to Max. WBD’s Kathleen Finch confirmed to The Hollywood Reporter that AEW’s archives will be available on Max. This will include past television shows. Dynamite, Collision, and Rampage should be easier to port to Max. New episodes of these programs I expect to be available on-demand for subscribers shortly after they air live, consistent what’s standard for major streaming services.
Pay-per-view events, though, which did not air on WBD’s cable networks might take more time to prepare for Max, so it’s unclear if the entire PPV library will be immediately available in January.
I don’t expect Collision and Rampage, live broadcasts or otherwise, to be a part of the “BR Sports on Max” $9.99 add-on. Note that the quotes in media this week about AEW are from Kathleen Finch, WBD’s executive overseeing entertainment content, and not Luis Silberwasser, who oversees Turner Sports. AEW is managed in WBD’s universe as entertainment, not sports.
Because AEW content will appear live and on-demand on Max, AEW will be in millions of additional households. WBD last reported that Max had 52.4 million domestic subscribers, as of the end of June. If about half of those subscribers don’t also have cable, the potential number of homes that could watch Dynamite or Collision will increase from just under 70 million (the coverage of TBS and TNT) to just under 100 million. I wouldn’t expect AEW’s viewership to increase proportionally, but to nonetheless increase to some extent upon being available on Max.
Pay-per-views will be available on Max. Starting in January, U.S. customers will be able to order AEW PPVs at a discounted rate to be determined, provided they’re Max subscribers at a minimum of $9.99 per month (or $99.99 per year). However, I believe it’s safe to say Max won’t be the exclusive provider and that PPVs will continue to be offered domestically not only through traditional cable and satellite carriers but also through digital carriers that have offered the PPVs, including Triller. BR, though, appears to be done as a PPV provider.
The value of the deal. Variety reported the average annual value of the renewed WBD deal at $185 million, updating its report after earlier writing the value was “upwards of $150 million”. Sports Business Journal, however, “estimated” the deal at $170 million annually, while still others in wrestling media including Fightful reporting “closer to $185 million”. I continue to believe WBD has a minority equity stake in AEW, and has held such ownership since 2019. The discrepancies in reports of the deal’s value could relate to in-kind value or changes in the speculative value of WBD’s equity.
The above paragraph was edited to reflect Variety’s updated reporting on the value of the deal.
The deal is a three-year term with an additional one-year option, according to Sports Business Journal and F4WOnline, consistent with Puck’s report weeks ahead of the announcement.
What we still don’t know or know less about
It’s unclear what the future of Rampage is. The show has the lowest viewership of AEW’s three weekly TV shows and wasn’t mentioned in WBD’s press release, so evidently isn’t part of the renewal. Maybe it will be offered as part of yet another media, or, maybe more likely, the TV brand will just go away.
What is Shockwave? AEW recently trademarked the name “AEW Shockwave” for purposes including the “production and distribution of ongoing television programs in the field of professional wrestling”. It could potentially be a part of a deal with Fox or another partner, but we don’t know yet.
Ring of Honor seems to be excluded from this deal. Despite AEW CEO Tony Khan’s expressed openness last July to rebranding ROH to “AEW Ring of Honor” for media deal purposes, there’s no mention of Ring of Honor to this point. It seems likely it will simply continue to be distributed on AEW/ROH’s HonorClub streaming service.
Will AEW have a new weekly show on a broadcast network? AEW is reportedly discussing a deal with Fox. While some speculate this could be for Fox’s cable sports network, FS1, sources suggest AEW is focusing on securing a broadcast TV deal, aiming to further increase the reach of its programming.
Putting another wrestling show on another cable network would barely increase the number of homes AEW reaches. With AEW coming soon to a major streaming service, Max, already on cable, the only form of media that could significantly add to AEW’s household reach would be a broadcast network like Fox, as lofty as that notion seems. Fox seems most likely at this point. I can’t rule out Ion or CBS. CW seems unlikely since it just started airing NXT. NBC seems least likely, given its relationship with WWE and that it will be airing Saturday Night’s Main Event specials beginning in December. ABC seems difficult to imagine, too, since there’s a TKO relationship there through ABC parent Disney and UFC.
There could be a future where WBD programming, Dynamite and Collision, are taped on one night per week, and content for a broadcast partner is taped on a second night. If there is an additional deal with an additional media partner, I’d expect that content to be produced at separate tapings, consistent with WWE’s production of Raw and Smackdown for different partners taking place at separate settings.
Will AEW become profitable?
AEW isn’t a public company and has no obligation otherwise to disclose its finances, so we may never be able to verify AEW’s profitability — but the answer, in my view, is most likely: yes, this deal will make AEW profitable in the near future.
Let’s conservatively assess the incremental media value alone. This year, I estimate AEW will generate around $90 million related to domestic media rights for their weekly TV programs, all from WBD. I think that’s about half of AEW’s total revenue for the year.
We have to make various assumptions to keep going here, but accepting just with the lower initial report from Variety and not considering any possible additional revenue from an additional TV deal with a partner like Fox, and assuming an annual escalator of 7.5% per year (which I believe is within the norm for media deals like this), AEW could be generating domestic media revenue at the cadence shown above: starting around $134 million in 2025 and at around $166 million in 2028. Keep in mind this is domestic TV revenue only, not including international media revenue, pay-per-view sales, or other revenue sources like live events, merchandise, and other consumer products and licenses.
Importantly, that would represent additional revenue compared to this year ($90 million) ranging from $44 million to $76 million per year.
In my attempt to estimate AEW’s profitability for 2023, I estimated a net loss of $34 million. Estimating AEW’s revenue is one thing — there are public metrics to use to make more informed estimates about revenue. Estimating expenses is more difficult. But if my $34 million net loss estimate for 2023 is in the ballpark, you could conclude that greater incremental revenues of $44 million to $76 million in each year of the deal, yes, would be enough to offset all the company’s expenses — providing other revenues remain relatively stable.
Like WWE in 2018, AEW defies the gravity of things like popularity and trends in ticket sales which once dictated financial wins and fails in the wrestling business. The company’s TV ratings may be declining, among other consumer metrics, but viewership ranks highly enough that major media companies are willing to agree to business deals more lucrative than any from a prior era.