MR. TITO STRIKES BACK - How Net Neutrality Matters to the WWE and Vince McMahon Returning to Football?

MR. TITO STRIKES BACK – How Net Neutrality Matters to the WWE and Vince McMahon Returning to Football?

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Welcome back to the column that needs no awards to justify its existence, Mr. Tito Strikes Back exclusively here at / Speaking of awards, I’m actually holding back on my 2017 wrestling awards because WWE still has a few events left on the calendar. Who knows? Maybe that Smackdown roster can pull a miracle this Sunday? Yeah right, but I have to be fair… Honestly, I’m struggling to come up with WWE awards because 2017 wasn’t exactly that company’s best year following Wrestlemania 33.

But what I want to talk specifically about today is NET NEUTRALITY. No, I’m not going to give you my political opinion on it. The last thing that you want from a wrestling column is politics. In my 19 years, I’ve heard you loud and clear… As a consumer of news and information on the internet, it upsets me when I see political opinion mixed in with sports, for example (looking at you SI’s Peter King!). Thus, I try not to upset you, my readers… I want this column to be an “escape” for you and take you on a wrestling adventure. Now, what you’re about to read is a technical explanation of “Net Neutrality” and then I’ll tie it into how it affects the World Wrestling Entertainment (WWE). Trust me, it will because of their WWE Network.

Let’s talk first about what Net Neutrality IS and then go from there…

What is “Net Neutrality” exactly and why does it matter if enacted or not?

Net Neutrality is a policy enacted by Federal Communications Commission (FCC) wing of the Federal Government that imposes that Internet Service Providers (ISP) do not give bandwidth favors to certain content providers or charge different $ amounts to different consumers or companies. In other words, ISPs cannot restrict connectivity rates of content providers by their own choice, charge content providers extra, or charge consumers different rates under the neutrality policy. They cannot show any favoritism towards certain providers over others and they cannot penalize consumers for excessive use (every one pays a flat rate with known terms).

As a Consumer, think of it like Insurance…

Compare HEALTH Insurance versus your AUTO Insurance. For Auto Insurance, when do you pay more? Well, if you’re careless with your driving by getting speeding tickets or wrecking often, you’ll pay a higher premium. Thus, it’s YOUR actions that cause the higher price paid. In this case, having Auto Insurance where the premiums rise based on your actions or higher consumption (more tickets, wrecks, or repairs) is sort of like a world where there is NO net neutrality in place. The more you utilize the internet, the higher the potential cost for you.

Consider Health Insurance, however… What most employers do is “spread the cost” across the entire employee base. Health insurance premiums are determined by the overall health insurance payouts and that determines how much more the employer will charge, per employee, for health insurance benefits. Every employee pays the SAME PRICE regardless of how many times they see a doctor, have procedures done, etc. Effectively, the price paid for your health insurance premium is averaging out the people who use it often versus people don’t use it. Yet, those who don’t require that much medical care are actually helping to pay for the group using the insurance payouts often. That would be like a world WITH net neutrality in place. The high rates that Comcast or AT&T charges you for the internet is spread across the entire user base at a fixed rate.

If that doesn’t make sense… Think about eating at the Golden Corral buffet. Everyone pays the same $10 or so… You’ll have some who barely eat anything when they go and Golden Corral makes money on those individuals because they didn’t eat $10 worth of stuff. Then, you’ll have individuals with a tapeworm who will overeat and will eat more than $10 worth of food. Nothing but steak!

Think about WWE Network‘s $9.99 price… Some just have the network to watch Pay Per Views. Thus, on 2 nights a month, that person watches the WWE Network and doesn’t touch it for the rest of the month. WWE makes money on those folks because their individual bandwidth costs are not exceeding $9.99 for about 6 hours of use per month. Then, you have a die-hard wrestling fan who watches the current Pay Per Views, many past Pay Per Views, documentaries, NXT, or is someone like me and repeatedly watches the same “Monday Night Wars” over and over again. That person eats up more than the $9.99 paid and is more expensive than the bandwidth is used.

The other part of net neutrality is more controversial and that’s the discriminating against content providers. For example, Comcast is invested in the Hulu streaming service… WITHOUT Net Neutrality, they could allow better connection rates for Hulu than they would Netflix. Effectively, Comcast’s actions to provide Hulu with better connectivity rates would put Netflix at a completely unfair disadvantage and could greatly affect Netflix’s business. WITH Net Neutrality in place, Comcast would have to offer the same connectivity rates to both Hulu and Netflix and any favoritism proven by the FCC could result in fines and other penalties.

Effective December 14th, 2017, the prior policy of the FCC to uphold Net Neutrality were repealed. Neutrality was in place as a policy since 2015.

So how does this relate to WWE?

Their United State television deal with Comcast/NBC/Universal, that’s how!

Reportedly, WWE’s deal with Comcast/NBC/Universal expires around September 2019. That’s important to note not just because WWE is reliant on the $175 to $200 million annual revenue that deal provides but also the FACT that Comcast is a major Internet Service Provider. Comcast, from what I could gather, is the largest ISP in the country with over 1/3 ownership of the market. If they were able to acquire Time Warner Cable, which they almost did for over $40 billion, they would have been a monster…

Without Net Neutrality, Comcast could charge the WWE extra for its bandwidth usage and also determine its connectivity rates. FURTHERMORE, Comcast could begin charging its Consumers of Xfinity products for excessive use. Like the WWE Network and watch it often? Well, your Cable bill might grow considerably!

HOWEVER – Part of a new deal with Comcast by the WWE could help influence Comcast’s decisions on WWE Network both on the connectivity, charging WWE, or charging Xfinity consumers. In other words, it’s probably in WWE’s best absolute interests to STAY with Comcast because the life of the WWE Network depends on it without Net Neutrality in place.

In fact, it might be in the WWE‘s best interest to not see much growth in their television rights revenue in order to strike a deal on bandwidth usage both for the network and consumers. It’s sort of like a bribe for Comcast to “look the other way” and favor WWE Network and its consumers. Certainly, that creates future anti-trust challenges if another streaming service that airs wrestling is somehow restricted by connectivity problems and higher bandwidth costs for both the company and Xfinity consumers… But can you prove that in court? WWE and Comcast have very good lawyers and in case you haven’t noticed lately, there’s a WWE Hall of Fame guy in the White House and former WWE CEO/President Linda McMahon (also wife to Vince McMahon) in that President’s cabinet.

Now, now… You’re suggesting that I went political. No, I’m just stating FACTS… Vince McMahon is good friends with President Donald Trump AND Linda McMahon is in Trump’s cabinet. Those are facts. Trump controls the Justice Department which would challenge for any monopolistic or discriminatory practices by a company… Thus, if Comcast were to favor WWE Network in any way, shape, or form and restrict other streaming services instead… Old friendships and alliances then come in handy.

In my opinion, I believe that during 2018, the WWE will announce an EXTENSION to their Comcast/NBC/Universal deal that potentially expires during 2019. The reversal of policy by the FCC to repeal Net Neutrality almost guarantees that. WWE needs Comcast to play nice with its WWE Network because now that we’re heading into its 4th year, the WWE can’t quite go back to Pay Per View. They’ve built a culture where $9.99 a month is the price for Pay Per Views and it’s hard to go back. USA Network still needs WWE because a streaming competitor, Netflix, is absolutely killing its syndication market. The extension makes too much sense and benefits WWE greatly even if the deal’s $ growth doesn’t exceed $175 to $200 million significantly. WWE gaining another 5 year extension onto their existing Comcast/NBC/Universal deal would guarantee that WWE Network would not be affected by Net Neutrality in any way, shape, or form.

That’s one of my predictions for 2018 that I’m delivering to you early… WWE, during 2018, is going to announce an extension in their Comcast deal to probably go through 2024 or 2025. On top of weak demand showed by other Cable networks during 2014 to acquire WWE, the WWE is probably thinking that their Comcast/NBC/Universal deal is “as good as it gets”. With WWE Network, however, they NEED Comcast more than ever if Net Neutrality is no longer in place. Reportedly, Congress might try to form a bill to make Net Neutrality a permanent law beyond what the Executive Branch can do, but don’t forget who must sign that bill into law… Do you have that 2/3 votes in the Senate to override a Presidential Veto? I bet they don’t, at least for 2018.

Again, not politics… Stating facts.

That said, having NO Net Neutrality policy in place could be more beneficial than you think… I pay the highest rate for the highest speed from Comcast and I cringe paying that each month… In my mind, I’d rather pay more for the WWE Network (my choice) than having everyone’s high bandwidth usage spread to my bill. FURTHERMORE, without Net Neutrality, it would cause the WWE Network programmers to figure out ways to stream more efficiently to REDUCE bandwidth usage to be far more cost effective. With Net Neutrality in place, there’s no incentive to improve efficiency of streaming because it costs the same no matter what happens. If your internet usage is minimal and you just stream for WWE Pay Per Views, you may actually save money… Honestly, if a policy of NO net neutrality forced Netflix, Hulu, and WWE Network to each be increased to $14.99 or $19.99 (each are about $9.99 or $10.99 right now), I’d probably pay it to avoid my Cable bill going up (if a deal was in place between those companies and Comcast). Before 2015, Comcast and Netflix had a financial deal in place due to the heavy bandwidth usage by Netflix users.

It’s all about the WWE Network now for the WWE… They are very dependent on it now but they also need a strong Cable/Satellite deal, too… Yes, many are “cutting the cord” but combined, they have about 90 million households still in place. Social Media + YouTube still cannot advertise the WWE Network like their weekly television shows. That’s a fact! Television remains their best advertising vehicle and unlike Hulu/YouTube, WWE makes significant revenues from their TV deals. Television deals remain at least 1/3 of WWE’s annual revenues and I’d argue “multiplier effects” because their weekly television shows advertise Pay Per Views, WWE Network, merchandise, and Live Events.


XFL – Part Deux – The Sequel

Reportedly, Vince McMahon is thinking about starting up another Pro Football league. It appears that he has created a separate entity called “Alpha Entertainment” that is Vince McMahon’s and not affiliated with the WWE whatsoever. If you’ll recall, the XFL was a WWE Corporation operation and WWE absorbed its losses following its single 2001 season (reportedly up to $50 million).

“Those who do not remember history are condemned to repeat it.” -George Santayana, 1905-1906

Yes, the National Football League (NFL) may have hit a peak and is somewhat in decline right now (lower viewership, lower attendance… sound familiar). But the NFL makes $13 billion per year in annual revenue! They also have anti-trust exemptions in place which restricts competition from truly challenging their cities, television contracts, and commerce.

Worse yet, Vince McMahon has FAILED at starting another pro football league in the past… So what makes the 2nd effort more special? After all, the XFL arrived during the PEAK YEARS of Creativity from Vince McMahon when the Attitude Era made his WWE wrestling product expand significantly. XFL was a disaster because Vince McMahon presented it in the light of a wrestling company and not a professional sport. He cared more about what the cheerleaders did in the lockerroom instead of focusing on the play on the field. Because the XFL was a start-up and paid players less, he didn’t steal talent from the NFL. And because he didn’t have NFL level talent, the play on the field was poor.

Maybe he should call his friend Donald Trump and ask him about the USFL? Again, I’m not going political here… Stating facts.

And I LAUGH that “it won’t affect WWE”. YES IT WILL! History proves that and financially, Vince will need money to start this operation:

(a) World Bodybuiler Federation (WBF) and XFL spread Vince McMahon thin in the past. It’s no coincidence that 1992-1993 and 2001 were bad creative years, with time, for Vince McMahon. His attention was elsewhere and the WWE product began eroding. Do you think that it’s any coincidence that the WCW/ECW “Invasion” was a complete failure during the same year that the XFL season happened? If WWE had upwards of $50 million in losses due to XFL, what if some of that money could have purchased Bill Goldberg, Kevin Nash, Sting, Ric Flair, Hulk Hogan, and Scott Hall to have a TRUE World Championship Wrestling (WCW) Invasion instead of whatever we had during 2001. WWE did it on the cheap because their resources were restricted due to the XFL.

(b) Would anyone give Vince McMahon a loan for a new Pro Football league? Again, Vince failed before at starting a pro football league. That’s quite a risky credit for him and if he’s not backing it up with WWE resources, his own personal finances and assets now come into question as collateral.

(c) Vince could sell shares of WWE stock for capital. Vince is the #1 shareholder of WWE Stock. He could sell a portion of his stock to raise capital for the league. However, is that good for WWE’s reputation if its CEO and Board Chairman sells their stock? That has a real risk of causing a sell-off of WWE stock.

(d) Vince McMahon is 72 years old. Can he handle the stress of failure?

(e) What Television Network would air the games? Viacom (UPN + TNN) and NBC “took a bath” on XFL coverage during 2001 when ratings tanked after Week 1. If Vince’s new league cannot secure a TV deal, it shall instantly die. CBS, NBC, ABC, and FOX are each biting from the NFL hand and won’t dare to air any of Vince’s football games. Cable or Satellite? Well, aren’t we cutting cords? Streaming service? Uh oh, there’s no Net Neutrality in place (see how this all ties in?).

(f) Can Vince guarantee that his players won’t get concussions? I don’t need to say any more. NFL is seeing many legal problems due to concussions and WWE has theirs as well. Why add more legal headaches with a culture that is losing faith in the “barbaric” nature of football?

HERE’S AN IDEA: Invest more time in making the WWE become a better WRESTING company.

How about that, Vince McMahon? Why are you so ashamed of the product that you helped build into a national product? History shows that you struggle to do well outside of wrestling so why risk it? Why can’t you challenge yourself to give us yet another booming era like the “Hulkamania” or “Attitude” Eras?

In some ways, maybe this football league is a ticket for Vince to retire from the WWE? At 72, I don’t see him being a CEO/Board Chairman of the WWE and operating a football league. I don’t know how he could do it… I’d be fine with that because, in my opinion, Triple H will be a fine replacement behind the scenes and with Creative. Vince could then try his football league and it doesn’t harm WWE (well, it probably will). Ride off into the sunset knowing that you created a WWE empire that made you enough wealth to start a football league on your own.

I think that Vince is nuts if he tries this… And if I were any WWE wrestler, I’d keep that resume handy. If everyone thinks that Vince’s proposed league won’t affect WWE, think again… Vince is still the #1 shareholder and CEO/Board Chairman. Until both of those facts change, it could have negative affects on the WWE. Stock could still take a hit and Vince will be spread thin. NOT GOOD.

It’s almost in a wrestling competitor’s best interest to spread propaganda to Vince to convince him to try football again… We’ll see if any Sinclair news broadcasts or anything related to Mark Cuban starts PRAISING Vince McMahon for trying another football league.


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