Pro wrestling billionaire Vince McMahon sucker punched his traditional television partners when he launched his direct-to-the-fans WWE Network earlier this year. The unorthodox manoeuver could transform his business— or he could fall flat on his face
Subtlety has no place in professional wrestling. Either you play big—to the smallest fan in the last row of a sold-out arena, to the millions tuning in each week on television—or you go home. And no one has understood that concept, what Roland Barthes once described as wrestling’s “spectacle of excess”, better than Vince McMahon.
In the four decades he has ruled World Wrestling Entertainment, the 68-year-old chairman and CEO has built the company from a solid regional operation to a powerful international brand that’s valued at $2.3 billion. Today, in addition to weekly television shows, which reach 15 million viewers in the United States, WWE has programming in more than 150 countries and 30 different languages. There are WWE movies, books, videogames, as well as the requisite T-shirts, hats and action figures.
Despite the breadth of its businesses, revenues have barely budged over the last few years, hovering at around $500 million since 2008, and profits have been similarly stagnant. Excluding a one-time writedown of $11.7 million, the company made $14.5 million last year, compared with $31.4 million in 2012 and $24.8 million in 2011. Despite these flaccid fundamentals, WWE’s stock price has more than tripled in the past six months, zooming from $9.70 in September 2013 to a recent all-time high of $31.98, enough to make McMahon, who owns 52 percent of the thinly traded shares, a billionaire once again (he was briefly a paper billionaire in 2000).
The shares are flying both because WWE is seeking a new television contract, at more than twice its current rate of $160.9 million, and because of persistent speculation that McMahon, who has never articulated a clear succession plan, might sell the company outright (both Comcast and the Madison Square Garden Co. have been rumoured as suitors). Another bright spot: Emerging market revenue has been growing at a 7 percent annual rate for a decade in countries such as India, Mexico and even South Korea, to $116 million last year.
He has been promising fans and investors a WWE Network since 2011, and in that time the vision for it has changed dramatically. It was first conceived as WWE’s version of the MLB or NFL Network. In theory a channel devoted to wrestling makes even more sense than a professional sports league, since, unlike baseball or football, WWE doesn’t have an off-season. (It puts on more than 300 live shows, 52 weeks a year.) But McMahon claims that model was only going to generate an anaemic 20 cents per month per subscriber, roughly on par with third-tier networks like MSNBC and Bravo, $0.21 and $0.24 a month, respectively (almighty ESPN commands an astronomical $5.54 a month). So he walked away.
Professional wrestling had been broadcast on national TV since the late 1940s, but by the 1960s the dozens of small-time wrestling organisations in the US, and their respective TV shows, were local. For the most part these regional companies played nicely with one another. They didn’t invade other territories or steal talent.
(This story appears in the 02 May, 2014 issue of Forbes India. To visit our Archives, click here.)