Staging another brazen advance into uncharted territory, shares
of World Wrestling (WWE 70.69, +4.07, +6.1%) once again find
themselves at all-time highs. The latest bout of favorable sentiment comes
after last night’s news that WWE completed landmark agreements with Comcast’s (CMCSA
32.53, -0.25, -0.8%) USA Network and 21st CenturyFox’s (FOXA
48.43, +0.75, +1.6%) Fox Sports, effective October 1, 2019, for the U.S.
distribution of WWE’s flagship programs Raw and SmackDown.
As part of these five-year agreements, Monday Night Raw will continue to air on USA Network while Fox Sports will distribute SmackDown Live each Friday on Fox broadcast network. These agreements increase the average annual value (AAV) of WWE’s U.S. distribution to 3.6 times that of the prior deal with Comcast’s NBCU.
According to WWE, the previous U.S. distribution agreement for Raw and SmackDown in 2014 provided $105 mln of contractual revenue growth from 2014 to 2018, increasing from $130 mln in 2014 to around $235 mln in 2018.
WWE management anticipates that revenue from “key content agreements” including the new U.S. deals, or “Existing and New Agreements” revenue, will grow to about $311 mln in 2019 and $462 mln in 2021. “To Be Negotiated,” agreements that are subject to renewal in the 2019 - 2021 period have revenue subsequent to renewal that is not ascertainable. Thus, revenue from the company’s “key content agreements” would increase to $314 mln in 2019 and $542 mln in 2021.
As for developing and operating financial plans for the future, the company is currently targeting Adjusted OIBDA of at least $200 mln for 2019, during which the new deals’ rates are effective for only three months. WWE’s management currently expects to reach agreements in the U.K. by the end of 2018, and in India during the first half of 2019.
So basically, WWE’s projection is of a doubling of its content fees as a result of the new deal to $542 mln. Further, WWE sees revenue growth from the distribution of its flagship Raw and Smackdown programs under the new content agreement of 255% from $130 mln in 2014 to $462 mln by 2021.
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