Analysis: Is Vince McMahon’s plan to sell WWE in trouble?
Vince McMahon, the executive chairman of Stamford-headquartered WWE (NYSE:WWE), is reportedly seeking $9 billion for the sale of the company. However, a leading observer of the professional wrestling industry is questioning whether WWE has lost its appeal with potential buyers.
In January, McMahon aggressively forced his way back into the WWE leadership that he resigned last summer amid press reports that he paid millions of dollars in hush money to former female employees millions of dollars who accused him of sexual harassment. One of the reasons that WWE cited for his return was to orchestrate “a review of its strategic alternatives with the goal being to maximize value for all WWE shareholders” ”“ which was widely seen as a fancy way of saying McMahon was eager to sell the company where he was the majority shareholder.
Last Friday afternoon, Bloomberg ran a report claiming that McMahon was seeking $9 billion for the sale of WWE ”“ the article was sourced with unnamed “people familiar with his thinking.” While it is uncommon for a company seeking to be acquired to publicize its selling price in the media, it is equally surprising that McMahon is asking that particular price ”“ Bloomberg pointed out that WWE reported $1.29 billion in sales last year, adding the $9 billion price tag was roughly 23 times the company’s operating income.
When McMahon returned to WWE, there was speculation that he was seeking a buyer within the media space. However, in an upcoming interview on the WAPJ-FM radio show “Nutmeg Chatter,” one of the most prominent observers on the professional wrestling space openly questioned whether that scenario was likely.
“I don’t think it’s very likely that any major media company is going to buy WWE,” said Brandon Thurston, editor of Wrestlenomics. “The one that on paper makes the most financial sense would be Comcast/NBCUniversal.”
Thurston explained that Comcast/NBCUniversal is reliant on WWE content for its Peacock streaming service, while WWE”™s programming also appears on the company”™s USA Network cable channel.
“In a market where live sports rights fees so far have only continued to become more and more expensive for these networks like NBC/Universal, it would make a lot of sense to just buy the company and not have to worry about those rights fees continuing to increase,” Thurston added.
However, Thurston also pointed to an interview between WWE CEO Nick Khan and David Faber, a CNBC anchor, that appeared to kibosh that idea. Thurston noted how the anchor “who presumably is informed basically tells Nick on right on the air that ”˜I don’t think that’s going to happen, I don’t think Comcast is going to buy you.”™ And that aligns with my belief that I think Brian Roberts who’s the Comcast CEO, doesn’t want to own a wrestling company, for some reason.”
Thurston explained that despite WWE”™s ongoing popularity with the viewers of Comcast’s media outlets, having full ownership would not fit into the Comcast scheme of things.
“I can only speculate that it’s just a brand thing,” he said. “Perhaps because it’s a difficult thing to manage. There have been many examples throughout history of big wrestling companies not being managed well ”“ you put people in charge who maybe aren’t the right managers of it. And wrestling being a fake sport and not having the greatest image, and on top of this Vince has come back after numerous sexual misconduct allegations. His presence and his return to the company, I think, adds another layer of problem and dissuades potential buyers.”
Thurston speculated that any potential buyer might be a privately-owned company outside of the media industry. He highlighted Endeavor, which owns UFC, would be the most likely buyer if a deal could be reached.
“There are some obvious ways that that could work,” he said. “But I think the idea of a major media company like Comcast, like Amazon, like Netflix, like Disney, I think that’s all not going to happen. I would be very surprised at this stage if that happens.”
Photo of Vince McMahon courtesy of WWE