WWE Q4 2021 Preview: Record profits, media rights optimism, live events trouble

On Thursday’s earnings call, WWE will almost certainly report 2021 was its most profitable year in company history, with annual revenue surpassing $1 billion for the first time.

Wrestlenomics estimates 2021 revenue of $1.102 billion, net income of $174.5 million, with a diluted earnings per share ratio of $2.05 for the year. We estimate EPS for the fourth quarter at $0.68, which we understand is higher than any analyst’s current estimate.

The company will disclose new information covering the months of October to December. This will be the first full fiscal quarter of live event touring since Q4 2019.

Media rights value

WWE president Nick Khan will host another installment of his quarterly masterclass series of podcasts on the sports media business — or as some call them, WWE quarterly earnings conference calls.

U.S. rights fees for Raw and Smackdown are the company’s most crucial deals, currently held by NBCUniversal and Fox, respectively. Terms are still nearly two years away from expiring but they may be the most valuable U.S. sports rights renewal on the horizon. NFL, NHL, and Premier League rights were re-dealt within the last year, and NBA and MLB’s current deals extend beyond 2024, after Raw and Smackdown current terms conclude.

Flirtations with sports rights by the FAANGs (Facebook, Amazon, Apple, Netflix, Google) continue to drive optimism. Specifically, Apple and Amazon have shown interest in live sports. Amazon currently has a deal with the NFL and Apple has reported interest in NFL Sunday Ticket, as well as MLB and MLS rights.

It’s not clear whether any of the major tech players have serious interest in WWE core content. Next-day rights to flagship programs, though, currently held by Hulu are likely being shopped currently. A new deal should be announced sometime this year. Should WWE reveal a tech player like Amazon or Netflix bought those rights, it would probably excite the stock, which was stagnant in the bull market of 2021. Such an event would fuel speculation (realistic or not) that FAANGs could actually bid for live rights to Raw or Smackdown. An announcement that next-day rights will go to Peacock (where WWE’s monthly peak events and library resides in the U.S.), though, still seems like the safest bet.

But as any wrestling fan active on Twitter can tell you, WWE’s TV ratings are in long-running decline. Doesn’t that mean we should be cautious about the value of the company’s key programs?

Raw in particular has fallen below the general decline of linear TV in some recent years, though not in 2021. Smackdown on Fox, has held up better over the years thanks to moving into improved time slots and networks. The blue-branded show also held up better throughout the fall while Raw suffered as usual against Monday Night Football. Still, new competitor All Elite Wrestling’s Dynamite program on Wednesday on TBS continues to draw nearer to both Raw and Smackdown with viewers in the important 18 to 49 ad demographic, a fact WWE has reacted to by framing AEW as a more violent alternative, unattractive to business partners and viewers.

Nonetheless, we believe WWE’s rights values remain strong as long as Raw and Smackdown remain highly-ranked with viewers 18 to 49 and as long as the broader market of suitors for those rights (TV networks and, theoretically, streaming platforms) maintain stable economics. And we believe a disproportionate share of the value in media rights remains with programs that can finish among the top five or so slots on their given night.

Raw and, to a lesser degree, Smackdown’s ratings have suffered for many years, to a worse degree than necessary thanks to often abysmal content orchestrated by head of creative and CEO Vince McMahon. But over the years, Raw and Smackdown’s rankings among programming generally, has held up better, as frustrating as that is for a wrestling fan who wants to see great content rewarded and weak content discouraged.

WWE Network

WWE has also made efforts to change viewing habits for fans with Saturday (rather than Sunday) tentpole events in stadiums. This year’s Royal Rumble was at The Dome at America’s Center in St. Louis, and this year’s Money in the Bank and Summerslam will be held at Allegiant Stadium in Las Vegas and Nissan Stadium in Nashville respectively. These initiatives are led by Khan to extract more revenue out of the company’s biggest events.

According to Comcast’s latest earnings report, Peacock has 9 million paid subscribers. That doesn’t include the 7 million “highly engaged users” who have access to Peacock through their cable subscription like Comcast or Cox. In the U.S., the WWE Network peaked at 1.3 million subscribers in 2018, so the reach of WWE’s newly-dubbed “premium live events” (no longer “pay-per-views”) is higher than ever, even if a large portion of subscribers to the variety of content on the NBCU streaming platform are indifferent to WWE content.

In previous calls Khan disclosed that recent events were more highly-viewed than those in the previous year, not revealed in terms of viewers, but by percentage. Hell in a Cell 2021 was up 25% versus the previous year. Backlash was up 26% on Peacock. Money in the Bank was up 46% compared to the one that took place at WWE headquarters in 2020.

It’s possible a similar disclosure about this past Saturday’s Royal Rumble or other recent events will be reported.

Ads and sponsors

WWE has promoted itself as a company willing to make various brand partnerships. Zombies made a widely–panned appearance at Wrestlemania: Backlash to connect with the movie Army of the Dead, which starred Dave Bautista. Bad Bunny and Johnny Knoxville were in the men’s Royal Rumble match, the latter to promote his new movie. Vince McMahon’s golden egg, a reference to Red Notice starring Dwayne Johnson, was stolen at Survivor Series, and the mystery around it coincided with Raw popping a rating the next night.

Expect these notes along with others to be thoroughly celebrated in a stream of B2B highlights narrated by Chief Brand Officer Stephanie McMahon in her opening comments. The tax the execution of these integrations may have on the audience, reminding viewers they are actually a means to corporate sponsors who are the real audience, surely won’t be raised.

We anticipate the ads and sponsors line under the media division being slightly up from 2020, but not quite to the level of pre-pandemic 2019.

Consumer products

WWE has made efforts to expand their brand in other areas, including NFTs. WWE entered into the NFT space releasing an Undertaker NFT coinciding with Wrestlemania in April and a John Cena NFT for Summerslam in August. Many of WWE’s product licensing deals have seen successful, but WWE’s foray into NFTs has been mixed.

There was no NFT offering associated with the Royal Rumble, traditionally a bigger event than Summerslam. The Cena NFT did not sell well, by Cena’s own admission.

Many successful NFTs give the owner something of continuous value. In WWE’s case that could be the right to every new John Cena T-shirt that’s released in the future, giving the NFT greater resale value. Wrestlemania tickets aside, we’ve yet to see WWE get more creative with the special access these digital assets might provide owners.

Live events

We expect WWE’s live events troubles to return in Q4 reporting. The division struggled to make a profit in the final quarters before Covid stopped touring and relieved scrutiny. Q3 was a great period as pent-up demand produced WWE’s best quarter for live events in many years.

The recent Royal Rumble was the second-highest grossing event by that name in company history, which will be used to obfuscate what we believe will be a loss of several million dollars in the first full quarter with ticketed events.

Perhaps the resurgence of the Omicron variant of Covid over the winter will be pointed to as a cause. But we believe the issue is fan interest and possibly the antiquated system of running untelevised live events, which fans widely know almost never have bearing on storylines.

AEW didn’t see a similar decline in attendance in Q4 for its weekly Dynamite tapings while weekly Smackdown and Raw tapings as well as frequent house shows declined.

*Average tickets distributed per event, according to WrestleTix estimates*

In one of the last quarters before touring shutdown due to the pandemic, Vince McMahon acknowledged there was a problem and promised to “reimagine” his live events strategy. We never got to find out what he had in mind.

The company is currently considering outsourcing its live events capabilities, as we’ve reported on Wrestlenomics Radio. If the plan comes to fruition, it’s possible those activities would be accounted for under the live events division, perhaps offsetting loses from touring. Whether such activities would be a distraction from WWE’s core issues is another question.

Questions we hope to hear in analyst Q&A

Does WWE view the new Premier League deal with NBCUniversal, in which the EPL was given a 2.7x increase in the average annual value of its payments, as encouraging sign for the renegotiation of its own live rights?
Does the company have a timeframe for when investors can expect an announcement on next-day rights?
Given the decline in attendance, does the company feel that untelevised live events are still a viable product?
Is there any more information WWE is comfortable disclosing related to the health or future of EVP Paul Levesque? Given the overhaul of NXT and concerns about his apparent heart issue, Levesque doesn’t appear to be held in such favor any longer. Vince’s son-in-law was widely-believed to be next in the line of succession to take over the creative duties of 76-year-old Vince McMahon one day. Does the company have a succession plan in place that clearly guides how duties would be dispersed if Vince were to be capacitated?
WWE launched its NIL (Name, Image, Likeness) program in the quarter. This “Next in Line” program is designed to recruit college athletes and prepare them to become WWE performers. What led WWE to launch this program? Was Vince McMahon dissatisfied with talent that was promoted from NXT to the main roster over the last few years? What will talent developed through the NIL program more effectively bring to WWE versus the previous system?
WWE hasn’t resumed it’s local Florida loop of small events since the pandemic. This was how inexperienced talent gained reps needed to develop into viable stars. Will that loop or something similar resume? If not, does the company feel that wrestling once a week in front of a global television or streaming audience is sufficient to develop valuable talent, particularly if WWE is prioritizing talent without prior wrestling experience?
What did WWE learn from its two experiments with NFT sales? Why was there no offering in conjunction with Royal Rumble?

We’ll be covering Thursday’s report and conference call here on wrestlenomics.com. You can also follow @BrandonThurston on Twitter for live tweets as details are released.

WWE’s financial documents will be released at about 4:30 p.m. ET on corporate.wwe.com and will be followed by a conference call at 5:00 p.m. ET. Vince McMahon, Stephanie McMahon, Nick Khan and Frank A. Riddick III are expected to speak on the call. New Senior Vice President, Head of Investor Relations Seth Zaslow could make an appearance as he has recently replaced longtime WWE finance executive Michael Weitz in the role.

Disclosure: We have no current positions in WWE stock (NYSE: WWE), nor do we have any plans in the next 72 hours to initiate any such positions. This article expresses our opinions, only. This article is not investment advice nor should it be construed as investment research.

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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Wrestlenomics Radio 2022 predictions

On the latest edition of Wrestlenomics Radio, Brandon Thurston and Chris Gullo gave their pro wrestling predictions for 2022. Thurston and Gullo gave their predictions to 11 questions that they listed. These questions range from who will be the top men’s champion in WWE and AEW to average viewership numbers.

1. Will NXT be on the USA Network at the end of 2022?

Brandon Thurston: “I’m going to guess they made a two-year deal, which would run from September 2021 through September 2023. Given that the relationship between WWE and NBCUniversal is so deep, it’d be very easy to move NXT to Peacock and then spin it as a lateral or upward movement because, ‘Wow, it’s such a big deal to be on Peacock, and it’s so important to be on Peacock. That’s where the future is, and we’re targeting a younger audience, even though we’re not capturing them.'”

Chris Gullo: “I’m gonna agree with you, but I think moving to Peacock is definitely something that’s going to happen in the future. I don’t think it happens next year.”

2. Will Ring of Honor run an event in 2022?

Gullo: “I don’t think so, and here’s the thing, even though the social media is acting like nothing happened, the Ring of Honor social media, now that Sinclair doesn’t have to put a lot of focus on it, and they got so much more things going on, I think it’s gonna be one of those things like, ‘Oh, I know we’re gonna reboot in April, but we’re coming back in June,’ and then it’s gonna fade away in obscurity.”

Thurston: “I guess it depends on what Sinclair really wants for content. I will say yes. Does Sinclair feel like it’s worth it to have to do something very cheaply to produce some sort of weekly content? Do they want new content, because you can get it done more cheaply than they were doing it.

“I think there’s still money to be made in these occasional Fite TV or traditional operators too, these PPVS, but I think they will at least run one show. I don’t know that there’s going to be a Ring of Honor ongoing promotion, but I bet there’ll be a Ring of Honor show in 2022 that may or may not resemble anything like what Ring of Honor has looked like over the last few years.”

3. Will a wrestle currently in NXT 2.0 be in a show-closing match for a main roster PPV in 2022?

Thurston: “Towards the end of the year, yes. Who would it be though? Bron Breakker, I guess. Is he going to get called up and develop quickly enough to be in the main event of a PPV? I will say yes, if nothing else, because Vince McMahon sort of has to validate his own decision here and give it a try, at least.

Gullo: “I’m gonna say yes because I think Bron Breakker or Von Wagner, and it might be Elimination Chamber or something like that. I think both of those guys are going to be in some type of main event program, one of those guys, if not both, by the end of the year.”

4. Who, if anyone, will beat Adam Page for the AEW title?

Gullo: “I will say MJF.”

Thurston: “It’s probably not Kenny Omega. They probably don’t go backwards to Omega. They probably don’t go backwards to Jon Moxley or Chris Jericho. Bryan Danielson? Probably not. Probably Adam Page has got to get a win over Danielson now, even though Danielson would maybe make a great champion at this point. Maybe Punk and then somebody takes it off of Punk. MJF is a good guess though. I will go with CM Punk.”

5. Who, if anyone, will beat Roman Reigns for the WWE Universal title?

Thurston: “It’s Lesnar or no one. That’s the answer. Big match John Cena’s got more important things to do. I’ll say Lesnar.”

Gullo: “I think he has to lose it eventually. I guess Brock Lesnar would be the best guess. I can’t think of anybody else. If Rock wanted to at least be there for a month or two, maybe.”

Thurston: “I don’t think Rock is committing to anything more than one match, though.”

6. Will Windham Rotunda sign with AEW, Impact, WWE, or another company?

Gullo: “We’ve been having a lot of chatter these last few months about, can there be a third wrestling company that has huge financial backing, and I think this year, you’re gonna see somebody probably say, ‘Hey, we’re starting a new wrestling company. Let’s get on this TV rights train,’ and Windham Rotunda will be the guy. That’s my prediction.

Thurston: “I hope it’s Robert Rodriguez relaunching some Lucha Underground type approach. I would say WWE would be likely. Anything’s possible.”

Gullo: “They’re selling Fiend holiday merchandise.”

7. Will New Japan get a weekly TV show on a network in >30 million U.S. households?

Thurston: “No. No. No.”

Gullo: “At this point, no. I think a couple of years ago would have been to strike when the iron is hot. I don’t think it happens now.”

Thurston: “I put the the threshold at 30 million households because that’s roughly AXS. That would be about a little less than half of U.S. households. Vice is about 50 million.”

8. How many times (in the same week) will Dynamite have a larger P18-49 audience than Raw?

Gullo: “I don’t really see wrestling ratings moving a lot in 2022, but I think this will probably happen, let’s say, three times.”

Thurston: “It’s happened twice this year. I don’t think it’s going to happen in the remaining few weeks of the year. January 3, there is Monday Night Football, so it could happen then. It came close before Monday Night Football. I will say five, five times in 2022.”

9. How many times (in the same week) will Dynamite have a larger P2+ than Raw?

Thurston: “Zero.”

Gullo: “I concur, zero.”

10. Who will buy WWE’s next-day VOD rights currently held by Hulu?

Gullo: “I’m going to go with the surprising candidate Tubi TV. Been seeing a lot of advertising for Tubi, and I think Tubi TV needs programming. Tubi TV will be buying VOD rights. Fox owns Tubi TV.”

Thurston: “The Fox connection does make sense. Peacock and Amazon, I think it’s got to be one of those two. I’ll take a lower revenue deal with Amazon just just to scare the crap out of my TV partners, but does Amazon really want to play there? I don’t know if Amazon really wants to play any U.S. sports rights outside of the NFL. I will say Peacock.”

11. Predict their average viewership (P2+ and P18-49) for 2022:

Thurston:

WWE Smackdown: 1.977 million, 0.52

WWE Raw: 1.587 million, 0.45

AEW Dynamite: 893,000, 0.34

AEW Rampage: 485,000, 0.18

WWE NXT: 525,000, 0.13

Impact Wrestling: 80,000, 0.02

Gullo:

WWE Smackdown: 2 million, 0.48

WWE Raw: 1.6 million, 0.42

AEW Dynamite: 900,000, 0.35

AEW Rampage: 450,000, 0.17

WWE NXT: 550,000, 0.13

Impact Wrestling: 97,000, 0.02

Excerpts from Wrestlenomics Radio were edited for clarity.

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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The future of WWE NXT 2.0 on the USA Network

During “The Gullo Report” on the latest edition of Wrestlenomics Radio, Brandon Thurston and Chris Gullo discussed WWE NXT 2.0 and what the future holds for the brand. The show is now more of a developmental show with young wrestlers like Bron Breakker leading the way, and many fans have wondered what this change into a more developmental brand means for WWE. Thurston gave his thoughts first by explaining where WWE is with NBC Universal and their deal for NXT.

“I’ve heard some discussion earlier this week about what the future of NXT is,” Thurston said. “NXT has a multi-year deal that was renewed in March that has just begun in fact, has just gone into effect. Term one just came to an end, which was a two-year deal, and whenever I go through all the data, when I’m looking back at when Dynamite started, and I have to be like, oh, yeah, NXT had these two weeks in September 2019 where they had one-hour episodes that were unopposed, yada yada.

“I wonder if the deal starts there and ends two years later in the middle of September, and for some reason, the timing of that is the reason why they did NXT 2.0 when they did, if that coincides with the beginning of the second term or second deal that we’re now under for WWE and NBC Universal for NXT. I don’t think WWE is getting that much revenue for NXT being on the USA Network.

“I think they were originally taken off the WWE Network to go on linear TV for the notion that Triple H had this overperforming developmental brand that was doing really well and maybe we could grow its popularity, and oh yeah, by the way, we don’t want to compete with AEW. That had nothing to do with it, god, no, but I think they wanted to compete with AEW.

“And that reason combined with the opportunity to maybe grow a third brand that would generate major media rights fees like Raw and SmackDown have, I think that was the play, and NXT did not win the Wednesday Night War. They got handily beaten most weeks in total viewership. I think every week except for one in the demo out of the 70 some odd weeks that they were running head to head, and it didn’t work out.”

Thurston continued as he talked about the new change in direction for NXT post Wednesday Night Wars. He then discussed if he sees NXT 2.0 on the WWE Network or remain on USA Network.

“There doesn’t appear to be a huge media rights value opportunity here related to the NXT brand,” Thurston stated. “The play, at least now, is to sort of hand wave Triple H’s vision of doing cool wrestling and to really make it a developmental brand that serves Vince McMahon’s wants for talent. As far as a media property, what is the goal for NXT?

“Let’s say this is a two-year deal. Who knows? But let’s say three years from now, when, if this is a two year deal, then the two year deal will be expired, is NXT still on the USA Network? What’s the viewership like? I don’t know. When you’re the USA Network, you could put what was in the slot before, Law and Order SVU reruns or something, which don’t cost you really anything because you probably own that intellectual property.

“I don’t know if there’s royalties that you have to pay out associated with that or all the costs are, but it’s not an original program they have to produce, and it’s probably quite profitable now. It’s probably got a pretty low demo rating. I don’t know if it’s got a better demo rating than this, which is a 0.14.

“I could see NXT being back on the WWE Network in a couple years, but I don’t have a strong feeling that NXT is going to be cancelled by NBC Universal / USA Network. I think it helps, even if this is sort of a breakeven for the USA Network in terms of what revenue they’re able to get out of NXT. Even if they’re not making money here, it’s still deepening their partnership with WWE, which is important to them, for Raw, which is by far their number-one program on the USA Network.

“It’s important for them with Peacock, which they need to grow for the future, and WWE is a significant part of what’s keeping people using Peacock, probably at least a million people who were used to watching WWE stuff on the WWE Network and now have got to go to Peacock to do that.”

WWE President Nick Khan has revealed in interviews that PPVs like Money in the Bank and SummerSlam have done better viewership on Peacock than on the WWE Network compared to 2019 numbers. Thurston then explained further why he sees NXT staying on USA Network.

“It may be just linear TV’s need for live content as we’ve seen the explosion of the number of wrestling programs that are on television,” Thurston noted. “Maybe the the bar has been lowered for how high you have to jump to get over to get on to linear TV, because linear TV needs live programming.

“It needs programming that people want to watch live now more than ever. So I remain somewhat optimistic.

“Although, I wouldn’t be shocked if NXT is no longer on the USA Network a couple years from now, but I remain optimistic that that’s going to continue to be the case, even though NXT is not this more ambitious brand in itself in terms of getting itself. Its priorities seemingly have changed to serve the main roster proclivities.”

Excerpts from Wrestlenomics Radio were edited for clarity.

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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How WWE, AEW and Vince McMahon view talent in 2021

On the latest edition of Wrestlenomics Radio, Brandon Thurston and Chris Gullo discussed the changes to WWE NXT in NXT 2.0. They played a clip from a video from Mick Foley out out titled “WWE: we’ve got a problem” where Foley pointed out the creative issues with WWE and the lack of cohesion between NXT and main roster WWE.

Thurston then referenced a line from Vince McMahon on the Q2 earnings call, said in response to the cuts WWE have made and CM Punk joining AEW. McMahon said, “I’m not so sure what their investments are as far as their (AEW’s) talent is concerned… but perhaps we can give them some more.” Thurston and Gullo broke down the statement as well as how talent are valued in WWE and AEW.

Thurston: “I feel sort of ridiculous that we’re trying to unpack such a small sentence. This is not some grand statement or speech that he gave. This is just one sentence, and we’re trying to read quite a bit into this, but on the other hand, we get so little in terms of what Vince really thinks he does. He speaks publicly so little, but is there any insight we can get from this?

“Along with some other moves that they’ve made recently, to me, that’s doubling down. All the talent that they’re cutting, cutting even people Braun Strowman. I’m thinking too about what Nick Khan said to Ariel Helwani, about indie wrestlers, if you will. If people move on, that’s fine by them, which is just great corporate speak to make it sound like they’re doing somebody a favor by cutting, but in some cases, they are, as far as their careers go.

“I think what we’re seeing happen is this bifurcating, that’s a Chris Harrington word, of maybe wrestling audiences, definitely two different creative visions of what their product is. WWE not even willing to accept that they’re in the wrestling business. AEW embracing that they’re in the wrestling business. Those visions are very different.

“They have different visions of what they do creatively, and they have different visions of what talent they value. They kind of already did in the first place, but I think we’re seeing a doubling down on that in WWE’s case.

“Maybe part of that is this sort of you can’t quit, you’re fired kind of thing. ‘Oh, these indie people are leaving us? Adam Cole is going to pass us up, and CM Punk was not interested in dealing with us. Apparently, we had some discussions with him, and we couldn’t get Bryan Danielson to stay. Jon Moxley wanted to leave a few years ago, and he left, wouldn’t even look at his deal, wouldn’t even look at what the money was that we were offering him.’

Gullo: “Christian. You got to add Christian not wanting to really pursue a deal with them.”

Thurston: “Maybe it’s sort of ‘I’m starting to feel rejected. So rather than allow people to reject me, I’m going to preemptively reject them,’ and I think we’re seeing maybe the next step is deals are coming up around the end of the year for three other wrestlers, Kevin Owens, Sami Zayn and Johnny Gargano, who, I would guess, are not going to re-sign with this company when when their deals are up.

“And these are three wrestlers who were big time indie wrestlers before they came to WWE, and you combine that with will if not wrestlers, not people who have already been in the wrestling business and have already been on, some level, relatively speaking, successful wrestlers, then what kind of talent are they going to sign? Maybe it’s more of the Gable Steveson types, on the high end. I don’t know how often you can sign a gold medalist, but that seems to be their idea.

“Obviously, we see that in the repackaging of NXT, NXT 2.0. Now, they just put the title on Tommaso Ciampa, who’s a big indie wrestler, but maybe that’s part of a transition into a future of WWE talent development that’s more about people who have athletic backgrounds, perhaps. Especially on the women’s side, maybe they’re fitness models but not necessarily independent wrestlers. I know Triple H, at the Las Vegas tryout said that it’s not a negative if they have indie experience. I’m not so sure. Maybe Triple H feels that way.

“It’s evident, through what NXT has put out, that Paul Levesque has a different creative vision than Vince McMahon about what pro wrestling can be creatively, and to Paul Levesque, I don’t think it’s a negative that you have independent wrestling experience. I think around 2014 he had a change of mind, at least he did relative to what he was willing to say publicly. I think what he’s willing to say publicly, as much as anybody, is not necessarily what he believes genuinely, and I don’t know what he believes genuinely.

“But in the case of Vince McMahon, I know Vince is very much just not aware of what’s going on in wrestling beyond his company, but I do wonder when or if he learns that somebody has an independent wrestling background or has any sort of wrestling background outside of the company, whether that becomes a negative to him and not a totally prohibitive negative but a negative. There are other things that can outweigh that.

“This is one thing we can say in WWE’s favor here, I think they do value diversity of people from a variety of backgrounds. That’s something that AEW needs to work on, in terms of having stars who are not just white guys. You’ve got CM Punk, that’s a big deal. You’ve got Bryan Danielson and Adam Cole, and this is a huge deal for the company, but in the future, they really have to look at building people from more diverse backgrounds.”

Excerpts from Wrestlenomics Radio were edited for clarity.

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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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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Return of live fans may not have the long-term effect on TV ratings some expect

On the latest edition of Wrestlenomics Radio, Brandon Thurston and Chris Gullo discussed the possible effects the return of fans at shows will have on television ratings. AEW will resume touring starting with Road Rager in Miami on July 7, and WWE will kick off a multi-city tour on July 16. Thurston and Gullo broke down what effect they think fans will have on TV ratings for Raw and Smackdown.

Since recording the episode, Thurston has added predictions for monthly averages for AEW Dynamite, WWE NXT, and AEW Rampage, seen in the charts below. Rampage debuts on TNT on Friday in a 10pm Eastern time-slot, beginning August 13, before both AEW weekly shows move to TBS in 2022.

Averages for Smackdown and Rampage in December will be challenged by running on Christmas Eve and New Years Eve, which fall on the last two Fridays of the year. Thurston anticipates Rampage will begin by performing close to Friday Night Dynamite’s Hour 1 average (562,000 viewers total, 277,000 in 18-49), and wane from there. The amount of time viewers are willing to spend watching AEW will be spread more thin, which will cause Dynamite’s viewership to be slightly lower than it would be otherwise as well.

By the end of the year, he sees Dynamite and Raw’s 18-49 viewer counts drawing close to one another, but not quite overlapping.

Chris Gullo: Fans are coming back. We had a Dynamite in front of fans on Wednesday, and we’re gonna have fans in WWE crowds in a couple weeks. How much of an effect do you really think it makes on the ratings because you’ve heard, ‘Oh, wrestling’s hard to watch with no fans, or in Thunderdome or with the same fans at Daily’s Place.’ Well now, we have live audiences all around the country.

They’re going to fill arenas. Do you really think it’s gonna make that huge of a difference on the ratings? I think because it’s summer, it won’t, but that’s just me. I don’t think, after a year and a half, someone goes, ‘I think I’m gonna watch Raw again because they have fans.’

Brandon Thurston: I was looking at what the month-to-month trends usually are, and usually, July is up from June and then August is up from July. I just sort of went through each week and tried to do a rough prediction of what I think is going to happen, trying to take into account holidays and things like that.

General overview, I think that there’s definitely going to be a short-term bump with Raw with its first event in front of live fans. It will pop a pretty big number over what it had been doing in the weeks leading up to it. Smackdown, same thing. I don’t know this, but I think they’re going to bring in John Cena and probably advertise him ahead of time and maybe he’ll start a program off with Roman Reigns heading towards Summerslam.

I think there’s going to be a short-term boost, and after that, both of these programs are just not good enough and don’t make people feel like watching them enough to sustain a long-term increase in ratings compared to their trends over the last year and a half during the pandemic.

Thurston noted WWE investors have high expectations for TV ratings when fans return.

Thurston: In July 2020, Vince was grilled on the earnings call about ratings and the excuse was that, well, once we get fans back in attendance, ratings will improve, and the Thunderdome was introduced partly to address that.

And the Thunderdome did coincide with ratings stabilizing. But I think investors are really expecting a major boost in ratings when fans return.

With the prediction that Raw and Smackdown will have a short-term boost, Thurston explained predictions for total viewership numbers for Raw and Smackdown for the remainder of the year. These predictions also take into account the NFL season where there will not be a lead-in during the holiday season like there was last year that led to a big number for Smackdown on Christmas.

Thurston: Let’s talk about what the averages were for June. I’m just gonna talk about total viewership here. Raw averaged 1.67 million viewers. Smackdown averaged about 2 million flat, which I think is the first time that the average comes in below 2 million on Fox. I think in July, about 1.7 million for Raw and 2.1 million for Smackdown, so they’re both up. This is for the second half of the month only, including live fans in attendance again, and then in August, 1.75 million for Raw and 1.20 million for Smackdown. And then in September, we’ll start to get back into the season of Monday Night Football, in the case of Raw, and I see it falling about 1.60 million for Raw and then maybe Smackdown, I feel like this is being generous, but Smackdown staying above 2.1 million.

It certainly may have John Cena throughout August, but then I see it really slipping for Raw down to 1.5 million, and Smackdown getting to 2 million flat again. Smackdown, the way the calendar works this year, is going to land on Christmas Eve and New Year’s Eve. So those ratings, almost certainly, are going to plunge. I see Raw doing 1.5 million through the prime of the football season so that will be scraping record lows again. To be fair, I expected that to happen last year, and it did not go as badly as I expected. I think that’s partly thanks to the Thunderdome, remember through the summer where they were panicking with things like Raw Underground.

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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