Yahoo Finance What’s Next for WWE Stock?
Written by Nick Sciple at The Motley Fool Canada
This show originally aired April 3.
Transcript
I think we got to start off with the WWE (NYSE:WWE) deal last night, announced that Endeavor Group Holdings (NYSE:EDR) and WWE have agreed to a merger whereby Endeavor is going to spin off its 100 percent interest in the UFC Ultimate Fighting Championship into a new company which will have the ticker TKO and that company is going to be owned 51 percent by UFC Endeavor shareholders, with the other remaining 49 percent being held by WWE.
Those are some magic numbers because to make this Reverse Morris Trust structure or work legally Endeavor had to keep 51 percent of the company at the end of the day. But the transaction is expected to close in the second half of the year, then the CEO of the new company is going to be Endeavor’s current CEO Ari Emmanuel. He’s going to remain as the CEO at Endeavor as well, You’re going to retain the current WWE management and it will be the president of the wrestling division of this new company, Vince McMahon will be the executive chairman of the company just as he is of WWE. And you’re going to retain Dana White as the president of the UFC side of the business, so essentially you’re smashing together two unique, valuable sports media properties.
If you think about what UFC has done for ESPN Plus, they are really the anchor property that’s driven a large amount of subscriptions to that platform. If you look at what WWE with the WWE network has done for Peacock has really been a content vector for bringing a lot of new eyeballs onto that platform.
Another thing that’s interesting, for both of these companies, the driver of the business is media rights deals. In the case of UFC, it’s the rights deals with ESPN. In the case of WWE it’s with Peacock and Comcast on USA Network and Fox.
If you remember what Jim [Gillies] and I have talked about the [investing] thesis for WWE for quite a while. Either A, they’re going to go get acquired — well that happened! Or B, the driver of the stock will be this next round of video rights negotiations.
It looks like we got both of those things because we’re going to retain WWE as a public company and to the extent these new rights deals move up, then maybe the stock will come along except now, it’s not just WWE negotiating for these deals. You’ve combined it together with another extremely valuable property. Now, WWE’s rights deal, I think the current rates deal that will actually end where it could transition to a new group in ’24 for the UFC. They had signed a five-year deal with ESPN in 2018, if my understanding is, they signed an additional two-year extension. That agreement is going to be up in ’25. You could tell a story where in ’24, you’ve got Nick Khan, who was one of the best agents in Hollywood before he was the ahead of WWE, was the head of the CAA. That sports media rights segment of that business represented a lot of significant sports media folks — you might be familiar with Al Michaels, folks like that.
Do you think about the leadership at Endeavor? These are also really high-powered sports agents. Ari Emmanuel, if you’ve ever seen Endeavor, have you seen Ari on Entourage, that’s Ari Emmanuel. You’ve got two extremely valuable properties that have proven. I guess at ESPN and Peacock in the past and you have the people negotiating these deals. They’re probably the highest-powered sports agents in the world. If there’s anybody who can maximize the rights of those deals it’s probably going to be these folks.
I think that’s the story going forward with the stock. Now, it’s interesting to see the stock moving down a little bit this morning. Jim, your thoughts seeing that and thoughts seeing the deal. I probably talked for too long already.
The rest of this video is available to Motley Fool Canada premium members. Want to join? Learn more about our flagship investing service, Stock Advisor Canada.
The post What’s Next for WWE Stock? appeared first on The Motley Fool Canada.
Where Should You Invest $1,000 Right Now?
Before you put a single dollar into the stock market, we think you’ll want to hear this.
Our S&P/TSX market beating* Stock Advisor Canada team just released their top 10 starter stocks for 2023 that we believe could supercharge any portfolio.
Want to see what made our list? Get started with Stock Advisor Canada today to receive all 10 of our starter stocks, a fully stocked treasure trove of industry reports, two brand-new stock recommendations every month, and much more.
See the 10 Stocks * Returns as of 1/9/23
More reading
Brookfield Asset Management Spin-Off: What Investors Need to Know
Passive Income: 4 Safe Dividend Stocks to Own for the Next 10 Years
Fool contributor Nick Sciple has positions in World Wrestling Entertainment. The Motley Fool recommends World Wrestling Entertainment. The Motley Fool has a disclosure policy.
2023
