WWE stock was down almost 7.5% on Wednesday, which was the biggest hit the stock has taken in some time, and word now is that the drop was due to “panic” over FOX’s interest in renewing WWE SmackDown.
Brandon Ross and Rich Greenfield of LightShed Partners, who often have a presence on WWE investor calls, revealed on their latest podcast episode that a meeting was held earlier in the week, and Endeavor representatives voiced concern that FOX may not be a good partner for WWE.
The concern has to do with FOX not willing to meet the 1.75x renewal in rights fees to keep SmackDown on their network. Ross added that word of the meeting got out and that set off a “complete panic,” leading to the drop in stock.
Ross said, “This week, there was a meeting. This is what triggered everything. There was a meeting that we got tons of calls from investors about in which, apparently, the Endeavor team said that FOX was not a good partner and they don’t want to renew a deal with them, and that the 1.75x renewal that’s out there is too high. That set off a complete panic. The stock was, like, tanking the day after. What’s amazing to me is that it was probably a 10-person meeting, and it took this entire stock down because of probably the game of telephone and panic, and all these things that happen in the, quote, ‘media mafia’ hedge fund world.”
Ross and Greenfield then discussed FOX’s relationship with WWE. The exchange went like this:
Ross: The reality is — it seems to be — we’ve heard around that FOX is definitely talking down their interest.
Greenfield: No, no. They have interest. It’s just, there are two things that stood out.
Greenfield: One is — and this is something that I don’t think you saw a lot of reporting on — the entire FOX upfront, where WWE was a very visible part in the past, had no WWE this time.
Ross: Totally. Absolutely.
Greenfield: No presence of WWE. So that’s, you know, an interesting development.
Ross: That signal and the word around town, so to speak, is that FOX does not want to pay an increase on this, which makes sense in the context of —
Greenfield: And “this” means SmackDown, to be clear.
Ross: Which makes sense of Endeavor coming back and saying, apparently, we weren’t there, but it’s what set the stock panic off that they’re not a good partner and we don’t want to do a deal with them.
Ross and Greenfield then discussed potential alternative homes for SmackDown, which has been rumored in recent weeks. Ross wondered if there will be enough credible bidders to justify a rights fee increase.
Ross said, “And so now you have a situation where, if FOX isn’t willing to pay an increase on SmackDown, who is the bidder that is going to step in? And it isn’t immediately obvious to the street who that bidder is. There are possibilities out there. Could Disney come in? I mean, it is a content fit for Disney. Disney is slashing costs right now. I don’t think they really know what ESPN is going to be. Could NBCU move from one package and go back and take SmackDown as they have in the past? Sure. What’s the price they’re willing to pay? But the bottom line is — I mean, think about it — you need multiple bidders for any property in order to get any kind of increase, or substantial increase.”
As we’ve noted, FOX and NBCUniversal (USA Network parent company) had a one-month exclusivity window for TV rights fees negotiations with WWE, but it’s believed that the window has expired. There’s been no real talk of any other networks actively negotiating with WWE for the RAW and SmackDown TV deals.
Stay tuned to WrestlingHeadlines.com for more.
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(H/T to POST Wrestling)