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Who would buy WWE as McMahon comes back on board to continue selling

by SuperiorInvest

Chairman of World Wrestling Entertainment Inc. Vince McMahon is introduced during the WWE Monday Night Raw show at the Thomas & Mack Center on August 24, 2009 in Las Vegas, Nevada.

Ethan Miller | Getty Images

Vince McMahon returned to World Wrestling Entertainment board to facilitate negotiations on a potential sale prior to the renewal of the company’s media rights.

The concept of selling WWE is not new. CNBC also reportedIn April, it looked like a sell-off target and that it only appeared more attractive in July after the sexual abuse scandal. The rationale is fairly simple: WWE is valuable intellectual property.

IP ownership allows streaming services to exclusively offer content without the hassle of winning licensing rights in an auction every few years. WWE also has a lot to offer in terms of merchandising and theme parks.

WWE has hired JPMorgan to help advise it 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 deals to renew television rights.

Sales facilitation

McMahon’s return should help the sale run smoothly, although there may still be hiccups.

The former CEO and chairman is 77 years old and a major shareholder in WWE. He resigned after an investigation found he had paid nearly $15 million to four women over the age of 16 to suppress allegations of alleged sexual abuse and infidelity. A return to the board will give potential buyers confidence that it supports the details of any transaction.

“My return will allow WWE, as well as all parties to transactions, to engage in these processes knowing that they will have the support of the controlling shareholder,” McMahon said in a statement Thursday.

McMahon’s return does not affect the current management. McMahon’s daughter Stephanie and former CAA agent Nick Khan are co-CEOs. However, it remains unclear what type of role, if any, McMahon would want in WWE if he were to sell the company. WWE has he told investors that McMahon’s role at the company was critical to “our ability to create beloved characters and creative stories.” Currently, McMahon has no formal say in the creative direction of the company.

Mansoor (bottom) competes with Mustafa Ali during the World Wrestling Entertainment (WWE) Crown Jewel pay-per-view in the Saudi capital Riyadh on October 21, 2021.

Fayez Nureldine | AFP | Getty Images

It is not known whether the buyer would be comfortable with McMahon taking on a more hands-on role at the company. But WWE is McMahon’s life’s work. It is possible that the sale can only occur with at least some strings attached.

WWE has a market cap of more than $6 billion after growing nearly 17%% percent on Friday, supported by increased speculation about sales.

There are three categories of likely WWE buyers – legacy media companies, streamers and entertainment holding companies. Here’s who might care.

Comcast

Comcast, which owns NBCUniversal, is a potential buyer for WWE. McMahon’s company already has an exclusive streaming deal with Comcast’s streaming service, Peacock, and a cable deal with USA Network NBCUniversal. With a market cap of more than $160 billion, Comcast can easily afford a company — especially with a check for $9 billion (or more) coming as soon as January 2024 from Disney for a 33% stake in Hulu.

Comcast can lock WWE in perpetuity without having to pay upcoming rights increases and can use the company’s IP for theme parks, movies and other spin-off series.

Still, Comcast CEO Brian Roberts said in October “the bar is the highest it’s ever been for mergers and acquisitions” and has repeatedly stated that the company is in no rush to make an acquisition.

Fox

Disney

Returning CEO Bob Iger may be looking to make a great acquisition when he takes the throne again Disney. WWE is a good fit for Disney in the same way it is a good fit for Comcast. It would boost Disney’s streaming ambitions (perhaps ESPN+), boost the linear network business, and add some weight to merchandising and theme park deals.

Comcast didn’t want Disney to go with Fox in 2019 and raised the price by tens of billions by outbidding Iger’s original offer. Could Iger see WWE as another IP battle between Disney and its rival Comcast?

Disney CEO Bob Iger attends the European film premiere of ‘Star Wars: The Rise of Skywalker’ at Cineworld Leicester Square on December 18, 2019 in London.

Wiktor Szymanowicz | Future Publishing | Getty Images

Warner Bros. Discovery

Netflix

Netflix has long avoided sports and other live events, but recently opened up to the idea of ​​owning the league outright or taking an ownership stake. Owning a sports league would give Netflix the ability to create video games and spinoff series without friction. Netflix has seen success with its Formula 1 documentary series “Drive to Survive,” giving CEO Reed Hastings confidence that certain sports properties will resonate with Netflix’s huge global audience. But Netflix does not own Formula 1, which limits its future options.

Acquiring WWE or another sports league would be a way to offer live entertainment without renting content – ​​much like Zaslav was thinking.

“We didn’t see a profitable way to rent major sports,” said CEO Ted Sarandos last month at the UBS Global TMT Conference. “We’re not against sports, we’re just pro-profit.”

Amazon

Endeavor Group Holdings

Endeavormanaged by super agent Ari Emanuel, could add WWE to his stable of assets after agreeing to buy 100% of the UFC in 2021.

Emanuel bought the UFC to expand the reach of the talent agency business into live events. WME-IMG, now just a part of Endeavor, represents many UFC athletes – as well as WWE superstars. The deal with the UFC was a success for Endeavor, which paid out roughly seven times over $600 million in 2016. UFC in 2022, it generated more than $1 billion.

Ari Emanuel speaks on stage during the 2017 LACMA Art + Film Gala honoring Mark Bradford and George Lucas presented by Gucci at LACMA on November 4, 2017 in Los Angeles, California.

Stephanie Keenan | Getty Images Entertainment | Getty Images

Endeavor’s enterprise value of just $11 billion makes WWE a huge leap for the company. The company’s relatively small balance sheet would likely prevent Endeavor from winning a bidding war against the media giants. But McMahon’s towering personality may be a match for brash Emanuel and UFC president Dana White.

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

Liberty Media

While Endeavor owns the UFC, Liberty’s Formula One Group owns Formula 1. Liberty’s majority shareholder John Malone and CEO Greg Maffei, along with Formula 1 CEO Stefano Domenicali, figured out how to promote the motor racing league globally, including breaking American culture after decades of obscurity.

Malone and Maffei have extensive experience maximizing media valuation and acquiring media assets under $10 billion, including Formula 1, Sirius XM and Pandora. Formula 1’s global success could provide a blueprint for WWE’s future strategy.

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

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