World Wrestling Entertainment, Inc. (NYSE: WWE) officially announced new TV deals with Comcast Corp. ( CMCSA) subsidiary NBCUniversal and Twenty-First Century Fox, Inc. ( FOXA), and the numbers were even better than the market had anticipated. WWE stock jumped 10 percent in premarket trading, and is positioned to open at new all-time highs above $70 per share.
Both new deals are five-year deals that start in 2019. NBCUniversal will continue to air WWE’s “Raw” show on the USA Network. WWE’s weekly “SmackDown Live” show will now move to Fox Sports.
Even prior to the official TV deals, WWE stock had more than doubled in 2018 on reports that the new TV deals could be three times the size of the current deals. In a statement on Wednesday, WWE said the new average annual value of WWE’s U.S. TV distribution will be 3.6 times the value of its current deals.
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WWE is now projecting revenue from core content agreements will increase from $270 million in 2018 to $348 million in 2019 and $576 million in 2021.
WWE CEO Vince McMahon says the “SmackDown Live” jump to Fox will help grow the company’s market.
“Moving ‘SmackDown Live’ to broadcast TV and having the ability to leverage Fox’s extensive portfolio of world-class sporting events will expand the reach of our flagship programming,” McMahon says.
WWE estimates there is an additional $114 million in projected 2021 core content revenue yet to be negotiated.
In addition, Guggenheim Partners analyst Curry Baker says investors can expect an even more lucrative deal five years later. He says the average annual value of $524 million for the new deal is still well short of the value of other professional sports TV contracts.
“We still see ample runway in five years when the U.S. rights for ‘RAW’ and ‘SmackDown’ are again up for renewal,” Baker says.
WWE stock has now more than tripled in the past year, but Baker says there are plenty of potential bullish catalysts ahead.
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“Beyond the U.S. renewals, we continue to see a number of opportunities for WWE including the U.K. and India renewals, incremental content deals (similar to the ‘Mixed Match Challenge’ on FB Watch), WWE Network tiering, sponsorship/advertising growth, and significant runway across business segments internationally,” he says.
Guggenheim has a “buy” rating and $82 price target for WWE stock.
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World Wrestling Entertainment, Inc. (WWE) TV Deals Are Bigger Than Expected originally appeared on usnews.com
