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WHAT THE NETFLIX DEAL MEANS OVERALL FINANCIALLY FOR WWE

First I want to say that here are a lot of assumptions that I am making here.  Dave Scherer and I will really dig into this when we record the latest episode of The Business Of Wrestling on Thursday.

Based on the last published 10-k (2/3/23) for WWE for fiscal year 2022, the revenue streams for what WWE calls “media” were as follows:

$      222,017,000.00	Network	Peacock, WWE Network, PPV
$      596,814,000.00	Core Content	Core content rights fees consist primarily of licensing revenues from the distribution of our flagship programs, Raw and SmackDown, as well as our NXT programming, through global broadcast, pay television and digital platforms
$        66,538,000.00	Advertising	Advertising and revenue from social media
$      148,508,000.00	"Other"	Other revenues within our Media segment reflect revenues earned from the distribution of other WWE content, including, but not limited to, certain live in-ring programming content in international markets, scripted, reality and other programming.
$  1,033,877,000.00

Presumably, Raw, Smackdown, NXT, and Hulu fall under Core Content, though perhaps Hulu could fall under “Other”.   We have a pretty good idea that Raw was at 260m and Smackdown was at 200m in revenues for 2022.  I am essentially using a plug for NXT and Hulu, though these numbers could go up or down.  I had heard NXT was doing around 10-15m in revenue.  The remaining revenue is the plug, which is International.

$      260,000,000.00	Raw
$      200,000,000.00	Smackdown
$        10,000,000.00	NXT
$        10,000,000.00	Hulu
$      116,814,000.00	"International"
$      596,814,000.00	"Core Content Total"

The table below shows 2022 revenues vice projected 2025 revenues with the new deals.  Note that you can expect escalation from the 2022 totals for 2023, which is what the multiples are based off of.  For example, while Smackdown shows a 44 percent increase from 2022 to 2025, we knows that the increase was really closer to 30 percent, and Wallstreet expected 40 percent.

At the surface level, it looks like Raw is getting a 92 percent rights increase.  However, based on the press release, it appears that all of the International rights (excluding Saudi Arabia) will move to Netflix as well.  As such, you need to include the revenue from the international events when coming up with the “true” increase.  That number is found in the last line below, which is roughly a 33 percent increase.  Wallstreet expected a 40 percent increase in rights fees for Raw. If you tweak the numbers for NXT and Hulu, you can get close to the 40 percent increase.  It will be interesting to see if the stock price holds its gains once smarter people than me crunch these numbers.

2022	2025	Increase
$      260,000,000.00	$             500,000,000.00	92%	Raw
$      200,000,000.00	$             287,000,000.00	44%	Smackdown	This was "really" a 1.3 increase which WallStreet wanted 1.4x
$        10,000,000.00	$               17,000,000.00	70%	NXT	Allegedly a 1.7x increase in rights fees
$        10,000,000.00	$               10,000,000.00		Hulu
$      116,814,000.00	0		"International"
$      596,814,000.00	$             814,000,000.00	36%	"Core Content Total"
$      376,814,000.00	$             500,000,000.00	33%		Raw + International Total

 

 

 

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