For the second time in a month, an investigation has been launched against the WWE. This time, it is over their new multi-year TV Deal with NBC Universal. WWE told investors and stock holders that they felt they could get a significant amount more than they actually ended up getting for their yearly price per year.
WWE only managed to get their TV deal to go up 25 percent compared to the last one. The price is set to be around $200 million per year, which is not bad, but is still by no means good. The issue is that WWE was making a little over $100 million for their previous TV Deal, and with WWE assuring investors that they could get far more, the WWE came off as lying to investors.
This caused WWE’s stock price to plummet over 40 percent in the last day and Vince McMahon alone lost around $350 million in this time. What could you do with $350 million in a day, right?
According to Charles C. Foti, Jr., a partner at the Law firm of Kahn Swick & Foti, LLC and the former attorney general of Louisiana, an investigation into WWE’s deal with NBC/Universal is underway, and it is basically regarding WWE’s statements previously over their television deal. The statement made by the law firm states:
“WWE disclosed that it had reached a multiyear deal with US broadcaster NBCUniversal for its long-running Raw and SmackDown programs, stating that the annual value of its television distribution agreements would reach $200 million, well below what investors were expecting.”
As previously mentioned, not only was the TV deal lower than expected but WWE along with other stock market experts claimed that WWE’s TV deal potential was higher than many thought.
WWE also had interest from places like Discovery, and even Disney. There is no disclosure of how many networks were interested in WWE or how much they were offered. However, the WWE most likely picked the one that gave them the most money as well as the best return on their time.
WWE left NBC Universal years ago and seemed very miserable with their place. Spike TV and MTV, the networks that had shown WWE programming, claimed they pushed away from WWE. WWE states the same. Both sides were not fans of the other, and yet even Spike TV wanted back in while WWE was on the open market. This was one of the many reasons they had not signed TNA Wrestling back up for a TV deal.
WWE was in talks with several places, but they obviously planned on staying put. They used the talk around that claimed how much they were worth to their advantage. The issue is that WWE did not “actually” take advantage. Only moving up around $100 million didn’t help much. While it is of course more than they had, WWE obviously was worth more than that. On top of this, WWE was telling people they could get more, and they probably could have somewhere else.
Due to all of this, investors are not happy. Who can blame them? WWE was at it’s highest price on the stock market in their history recently and just celebrated their 30th anniversary for WrestleMania. WWE was on cloud 9…. and then they signed with NBCU. Now two investigations are underway in less than a month, and stock has moved from an all time high to a massive low. We will have to see what comes of it. IQ will update you as we know more.
IMG Credit: Google