Saturday September 30, 2023

TKO $21B Merger Closes With Aggressive Ambitions

  • Deal to include as-yet-undetermined number of layoffs
  • Upcoming WWE media rights deal will be key early measure of success
Michelle Farsi/Zuffa LLC
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Created from the $21.4 billion merger of Endeavor’s UFC and WWE, the newly formed TKO Group Holdings aims to create a “premium sports and entertainment company” accelerating the two properties’ existing growth trajectories.

The long-planned merger officially closed Tuesday, and public trading began on the New York Stock Exchange. 

Despite some elements of uncertainty — including potentially higher-than-expected merger expenses and fallout from Vince McMahon’s legal issues — company officials intend to develop a world-leading organization building on an existing audience of more than 1 billion across 180 countries.

“We want to leverage these two great content creators, take one-plus-one, and create a five-or-six situation,” Lawrence Epstein, UFC EVP and COO, told Front Office Sports.

Endeavor will have a 51% controlling interest in TKO, while existing WWE shareholders hold a 49% interest. Endeavor CEO Ari Emanuel will have the same role at TKO and work in both capacities, while Endeavor president and COO Mark Shapiro will also work in a dual executive role. Dana White will serve as UFC CEO, while Nick Khan continues as WWE president.

The deal includes a $9.3 billion enterprise value on WWE and a $12.1 billion figure for UFC.

Notably, McMahon will cede control of WWE after more than 40 years, though he remains TKO executive chairman.

The merger has implied maximizing “cost synergies,” including an as-yet-undetermined number of layoffs. “We promised synergies, and we’re going to meet or exceed those promises,” Khan told Front Office Sports. “But this is going to be done in a surgical and thoughtful way.”

New Media Rights Coming

One of the first major items on TKO’s agenda will be the ongoing media rights negotiations of WWE’s Raw and SmackDown, which have deals expiring next year. 

Khan said TKO is well along in talks with potential partners and has expects to boost its current fees, which total about $468 million per year.

“We’re pretty deep into the process, and the marketplace is responding as we hoped,” Khan said. “We think things are going to work out as our shareholders want them to.”

A separate UFC deal with ESPN runs through 2025.

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