Who would buy WWE, as McMahon returns to board to pursue sale

Vince McMahon is back at it World Wrestling Entertainment board of directors to facilitate potential sale negotiations before renewing the company’s media rights.

The idea of ​​selling WWE is not new. CNBC reported that it looks like a sale target in April and that looks only more attractive in July after the sexual scandal gone wrong. The reason is quite simple: WWE is a valuable intellectual property.

Owning IP allows streaming services to offer content exclusively without the hassle of winning licensing rights at auctions every few years. WWE also has value to offer in the merchandising business and theme parks.

WWE has hired JPMorgan to help advise the company on a potential sale, according to people familiar with the matter. JPMorgan declined to comment. A WWE spokesperson could not immediately be reached for comment.

If a deal is reached, it would likely happen in the next three to six months, said the people, who asked not to be named because the discussions are private. WWE plans to talk to potential buyers before making a decision on a TV rights renewal deal.

McMahon’s return should help the sale process go smoothly, although there are still some hiccups.

The 77-year-old former CEO and chairman and controlling shareholder of WWE. He resigned after an investigation found he had paid nearly $15 million to four women over a 16-year period to drop allegations of sexual misconduct and infidelity. Returning to the board will give potential buyers confidence that they support the details of any transaction.

“My return will allow WWE, as well as any transaction counterparties, to participate in this process knowing they will have the support of the controlling shareholders,” McMahon said in a statement on Friday.

McMahon’s return does not affect the current leadership. McMahon’s daughter, Stephanie, and former CAA agent Nick Khan are co-CEOs. But it remains unclear what kind of role, if any, McMahon wants in WWE if he sells the company. WWE has told investors that McMahon’s role in the company is important to “our ability to create popular characters and creative storylines.” Currently, McMahon has no official say in the creative direction of the company.

Whether the buyer will be comfortable with McMahon taking on a larger role in the company is unknown. But WWE was McMahon’s life’s work. Maybe a sale can only be made with as little as a few strings.

WWE has a market capitalization of more than $6 billion after rising nearly 17 times% percent on Friday, supported by speculation of higher sales.

There are three categories of potential buyers for WWE – legacy media companies, streamers and entertainment companies. This is what you are interested in.

Comcast, which owns NBCUniversal, is a potential buyer for WWE. McMahon’s company already has an exclusive streaming deal with streaming service Comcast, Peacock, and a cable TV deal with USA Network NBCUniversal. Comcast has a market capitalization of more than $160 billion and can easily pay the company – especially with the $9 billion (or more) check that will arrive in January 2024 from Disney for a 33% stake in Hulu.

Comcast can lock up WWE forever without having to pay for additional renewal rights and can use the company’s IP for theme parks, movies and other spinoff series.

Still, Comcast CEO Brian Roberts said in October “the bar is the highest in terms of M&A” and has repeatedly said the company is not in a rush to pursue acquisitions.

Returning CEO Bob Iger may want to make a splashy acquisition when he takes the throne Disney. WWE matches Disney the same way it matches Comcast. This will increase Disney’s streaming ambitions (perhaps ESPN+), will support its linear network business, and will increase revenues for its merchandising and theme park businesses.

Comcast doesn’t want Disney to walk away with Fox in 2019 and increase its value by tens of billions by outbidding Iger’s initial offer. Could Iger see WWE as the next IP battle between Disney and rival Comcast?

Netflix has long shied away from sports and other life events, but recently became open to the idea of ​​having an outright league or taking ownership shares. Owning a sports league would give Netflix the ability to create video games and spinoff series without friction. Netflix’s success with its Formula 1 documentary series “Drive to Survive”, gave co-CEO Reed Hastings confidence that certain sports properties would resonate with Netflix’s global audience. But Netflix doesn’t have Formula 1, limiting its future options.

Acquiring WWE or other sports leagues would be a way to provide live entertainment without renting content – similar to Zaslav’s thoughts.

“We have not seen the way of profit to rent big sports,” said co-CEO Ted Sarandos Months at the UBS Global TMT Conference. “We’re not anti-sports; we’re just pro-Mowiki.”

Businessmanaged by superagent Ari Emanuel, could add WWE to its stable of assets after agreeing to buy 100% of the UFC in 2021.

Emanuel bought the UFC to increase the scope of the talent agency business for live events. WME-IMG, now only part of Endeavor, represents many UFC athletes – as well as WWE superstars. The UFC deal has been a success for Endeavor, which paid seven times the 2016 $600 million revenue in 2016. The UFC generates more than $1 billion in 2022.

Endeavor’s enterprise value of only about $11 billion makes WWE a huge swing for the company. The company’s relatively small balance sheet will prevent Endeavor from winning a bidding war against the media giant. But McMahon’s outspoken personality could be a match for Emanuel and UFC President Dana White.

Selling to third parties would also allow WWE to increase rights renewals every few years. That may not be positive for the company’s long-term future as the media distribution ecosystem changes.

While Endeavor has UFC, Liberty Formula One Group acquire Formula 1. John Malone, the controlling shareholder of Liberty, and CEO Greg Maffei, together with the CEO of Formula 1 Stefano Domenicali, have figured out how the global market of the car racing league, including cracking the American culture after decades of obscurity.

Malone and Maffei have an extensive track record of maximizing media valuations and acquiring media assets under $10 billion, including Formula 1, Sirius XM and Pandora. Formula 1’s global success could provide a road map for WWE’s future strategy.

Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.

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