It’s the end of an era. But is it the start of a new dawn? For 40 years, Vince McMahon reigned as the boss of World Wrestling Entertainment. Then, after The Wall Street Journal reported that he had sexual relationships with female employees and gave them millions in alleged hush money payments, he abruptly retired July 22 as chairman and CEO. The company now says it will revise past financial statements to account for $14.6 million in “unrecorded expenses” that have or will be made by McMahon from 2006 through 2022, with investigations also alluded to in filings.
The transition is leading some financial observers to bring up a question that’s been brewing for years: Could WWE now be sold by McMahon, its controlling shareholder? Loop Capital analyst Alan Gould is among those who see an increased chance of that happening. He upgraded WWE’s stock on July 25 from “hold” to “buy” and boosted his stock price target by $31 to $90 “based on a greater likelihood that the company is sold with Vince McMahon stepping down.” The same day, WWE shares soared to a 52-week high of $73.34. They had already performed like a champion in 2022, gaining 35 percent through July 22, compared to a 16 percent decline for the broad-based S&P 500 stock index.
One possible suitor? Comcast. The company has the domestic rights to various WWE content, ranging from weekly flagship show Raw, next-generation program NXT, monthly premium live events and reality series Miz & Mrs. And it is streaming the former WWE Network on Peacock under a deal with the sports entertainment firm. “Comcast represents almost a third of WWE’s revenue,” noted Gould, who also had a more cautious take: “CEO Brian Roberts has always prioritized long-term shareholder value, but especially after the $39 billion Sky acquisition, it may be tough to justify reducing the Comcast share buyback program to acquire WWE.”
MKM Partners analyst Eric Handler also sees the deal door opening a bit wider: “If anything, speculation of a potential sale of WWE now increases, and in our view, there would be no shortage of suitors.”
Another option could be Endeavor. CEO Ari Emanuel’s team is already battling for live events and TV audiences with mixed martial arts giant UFC, so WWE could fit right into the mix. And with such wrestlers as Dwayne Johnson and John Cena also having had successful film and TV careers, the Endeavor agency business could provide a boost for performers with similar ambitions. “We would expect Endeavor to be aggressive,” says LightShed Ventures’ Brandon Ross. But Handler isn’t sure it’s a fit: “They are similar but different businesses, they have some audience overlap. But ultimately I think the financial synergies are greater with a platform provider rather than someone like Endeavor that is a content provider as well. So, you could get bigger offers from some type of platform.”
Given Disney’s streaming and franchise focus, the company regularly comes up as a potential WWE buyer. The fact that it airs the UFC is seen by some as a potential natural home for WWE programming. But Gould noted another big deal on the horizon: “Disney’s balance sheet is still stretched from the Fox acquisition and the pandemic and has a $9 billion-plus obligation in January 2024 to buy the remaining third of Hulu from Comcast.”
The company built from the 21st Century Fox sale to Disney, Fox Corp, also has a big sports and live programming focus. Since it already airs WWE’s big weekly SmackDown show, it could make sense to look for more of the same to fill its original programming pipeline. But “it would be extremely difficult to justify a WWE acquisition,” given Fox’s smaller size compared to other media giants, including its enterprise value, and stock multiple, argued Gould.
With Netflix, Amazon and others competing for top sports and entertainment content to feed their streaming services, they have also at times been mentioned as possible suitors of WWE rights or the company overall. “Netflix is less likely as it has avoided sports and event programming, but WWE is a hybrid of entertainment and sports, it has a global following, runs 52 weeks per year and is much lower-cost than most sports programming,” Gould said about a WWE rights deal.
Other factors lean against a sale. McMahon’s daughter, Stephanie McMahon, formerly chief brand officer, was elevated to chair and co-CEO, which some see as a factor for keeping the company in the family. Her husband, retired wrestler Paul “HHH” Levesque, has returned as head of talent relations. The other co-CEO is former ICM agent and co-head of Television at CAA Nick Khan, who had served as WWE’s president and chief revenue officer since August 2020 and made a name for himself as a successful deal maker. “With Stephanie in charge now, I don’t think a sale of WWE is more likely at all,” says Rob Routh, analyst at FBN Securities. That is, “unless an offer surfaces having a valuation, structure and partner that the McMahons just couldn’t say no to.”