WWE Considers Sale of Its OTT Rights

  • WWE considering changes to WWE Network by the end of Q1 to boost revenue.
  • Average paid subscribers on the streaming service fell 10% in the fourth quarter to 1.42 million.
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WWE reported record revenue of $960.4 million in 2019, an increase of 3% that the company attributed to media rights distribution deals with its TV partners. But a sale of content available on the company’s paid over-the-top streaming service could now also be up for grabs.

Quarterly revenue increased 18% to $322.8 million, the highest in the company’s history but short of analysts expectations of $333.3 million. Results were partially offset by lower ticket sales and a decline in WWE Network subscription revenue.

WWE is weighing multiple scenarios  around the future of WWE Network, its OTT streaming service, Chairman and CEO Vince McMahon said on the company’s earnings call. They include selling the distribution rights to all the content, including pay-per-views.

“We have a lot of options. We can continue as we are now with a free tier and enhanced paid tier, or we can sell the rights to majors [media partners] who are clamoring for that content. That will offer a significant increase in terms of revenue,” McMahon said, noting that the wave of legacy media companies entering the OTT space has created this opportunity.

Revenue for WWE Network last year fell 7% to $184.6 million, and the average number of paid subscribers declined to 1.42 million, the company said. The service debuted in February 2014 and peaked at 1.59 million subscribers at the end of 2018.

Changes to WWE Network’s business model could roll out as early as the end of the first quarter. Keeping the service in-house will likely force WWE to introduce paid advertisements for the first time to increase profits. However, if distribution rights are sold, WWE will look to keep all consumer data captured through the use of its service, it said.

“At this time, the outcome of these initiatives is subject to considerable uncertainty,” Frank Riddick, WWE’s chief financial officer, said on the call Thursday.

WWE completed the migration of WWE Network to a new digital platform over the summer that promised to improve the user experience. The initiative ate at the company’s operating margin and failed to generate significant growth in subscribers.

WWE has also begun to roll out a tiered-pricing model in recent months for WWE Network that includes both a free option and a paid offering available to fans for $9.99 per month. WWE already has one of the best social followings online among sports properties, including YouTube, where the company has more than 54 million subscribers.

READ MORE: WWE Draws Closer To Rolling Out A New Tiered Streaming Service

WWE announced on January 30 that it had parted ways with Co-Presidents George Barrios and Michelle Wilson. Both were integral in the development of key company initiatives that exist today, including WWE Network.

In the days following the announcement, the company’s stock fell as much as  29% as investors remain wary amid delays over the announcement of new media rights deals in the Middle East and India.

“We had a different view of execution in our areas of focus. George Barrios and Michelle Wilson made more than significant contributions to the company,” McMahon said. “ But even with the changes, we won’t miss a beat.”

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