World Wrestling Entertainment, Inc. (NYSE: WWE) stock hit a new all-time high this week after CEO Vince McMahon announced that he will bring back the XFL professional football league in 2020. The return of the XFL makes for some big sports headlines, but WWE stock is likely reacting instead to a developing bidding war for WWE’s TV rights.
On Thursday, McMahon confirmed rumors that he will re-launch the XFL via a privately funded company called Alpha Entertainment. Reports began in December that the XFL would make a comeback when McMahon sold $100 million of his WWE stock and filed for a handful of trademarks related to the original XFL.
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On a conference call on Thursday, McMahon reassured WWE shareholders that WWE and the XFL have no financial ties. McMahon also said he will hire a separate management team for the XFL, and his daily responsibilities with WWE would not be impacted.
The original XFL launched in 2001, lasted just one season and is widely considered one of the biggest failures of McMahon’s career. WWE and original partner NBC reportedly lost $35 million each on the XFL, according to ESPN.
But now that WWE shareholders have been reassured that they will not be on the hook for XFL version 2.0, they can turn their attention to a potential bidding war developing for WWE’S TV rights. WWE stock is up 11.6 percent this month, and Variety reported this week that Twenty-First Century Fox ( FOXA) could be a leading bidder for WWE’s TV rights. WWE’s current contract with Comcast Corp. ( CMCSA) subsidiary NBC Universal is set to expire at the end of the year.
WWE’s signature programming, “WWE Raw” and “WWE Smackdown” both appear weekly on USA Network. “Raw” marked its 25th anniversary show this week.
Variety reports that Facebook ( FB) and Amazon.com ( AMZN) are also reportedly interested in bidding for WWE TV rights.
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Wells Fargo analyst Marci Ryvicker says TV deals may pave the path to a higher share price for WWE this year.
“After digging into the math behind the upcoming TV licensing deals, we still think there’s plenty of potential upside from here,” Ryvicker said earlier this month. “Bottom line, this one checks all of the boxes for us and we believe it has a clear path of catalysts through 2018.”
Wells Fargo has an “outperform” rating and $43 price target for WWE stock.
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Here’s Why World Wrestling Entertainment, Inc. (WWE) Stock Is Soaring originally appeared on usnews.com
