The stock price of TKO, the new holding company for WWE and UFC, dropped sharply on Thursday after the WWE announced that it will move its popular show SmackDown from Fox to USA Network in 2024. The deal, which is reportedly worth $1.4 billion over five years, represents a 40% increase from the current contract with Fox, but investors were not impressed by the move.
Why did WWE switch networks?
According to SBJ’s John Ourand, who broke the news, the WWE decided to switch networks for several reasons. One of them was the desire to consolidate its programming on one platform, as USA Network already airs WWE Raw on Monday nights. Another reason was the dissatisfaction with Fox’s promotion and scheduling of SmackDown, which often faced preemptions and delays due to other sports events. The WWE also wanted to have more control over its content and distribution, as Fox had the rights to stream SmackDown on its own platforms.
How did the market react?
The market reaction was negative, as TKO shares fell by almost 15% on Thursday, closing at $85.97. TKO, which went public just over a week ago at $102 per share, saw its market value drop by more than $1 billion in one day. Analysts and investors questioned the logic and value of the deal, as they expected a higher increase in the rights fees and a better exposure for the WWE brand. Some also expressed concerns about the future of the WWE’s media-rights deals, as the company still needs to sell its flagship show Raw, which expires in 2024.
What are the implications for the WWE and the UFC?
The deal with USA Network is not all bad news for the WWE, as it will still receive a significant boost in its revenues and have more creative freedom. The WWE will also produce four prime-time specials per year that will air on NBC, which could attract new and casual fans. The deal could also benefit the UFC, which is part of TKO, as it could leverage the NBC relationship to negotiate better terms for its own media-rights deals, which expire in 2025.
However, the deal also poses some challenges and risks for the WWE and the UFC. The WWE will have to deal with lower ratings and reach, as USA Network has a smaller audience and distribution than Fox. The WWE will also have to compete with other sports and entertainment programs on USA Network, which could affect its viewership and advertising. The UFC, on the other hand, will have to cope with the volatility and uncertainty of the TKO stock, which could affect its valuation and growth prospects.